HSBC Bangladesh has conducted the country’s first blockchain-based letter of a credit transaction on the Contour DLT platform.
It has been reported that the transaction was used to settle the importation of 20,000 tonnes of fuel oil from United Group’s Singapore subsidiary United Mymensingh Power.
Md Mahbub ur Rahman, the Chief Executive of HSBC Bangladesh, described the transaction as showcasing the bank’s commitment “to supporting cross-border trade by Bangladeshi businesses using cutting-edge technology platforms.”
“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognize transparency, security and swiftness in performing tasks using blockchain technology.”
However, SWIFT, the global payments service, estimated that Bangladeshi trades using letters of credit, or LCs, were worth more than $34 billion during the first half of 2020.
By utilizing blockchain technology, the time taken to process the transaction was reduced from between five and 10 days to less than 24 hours.
Thus, Moinuddin Hasan Rashi, the Managing Director of United Group, said:
“Fuel oil LCs are highly time-sensitive where every second counts and we believe this blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management.”