YES Bank will be now using blockchain technology to help consumer electrical goods manufacturer Bajaj Electricals to digitize payments to its vendors. YES Bank will be using a smart contract developed by fintech start up Cateina Technologies on the blockchain which will allow Bajaj Electricals to process disbursement of of funds and discounting to its vendors. The solution will also facilitate an automated debit from Bajaj Electricals’ account by YES Bank.

A blockchain , the underlying technology in bitcoins and other cryptocurrencies, is a shared digital ledger which is continuously updated with all transactions. This ledger keeps a record of each transaction that occurs across a fully distributed or peer-to-peer network, either public or private. One of the biggest uses of the blockchain are the development of smart contracts, a set protocols that facilitate, verify, or enforce the negotiation of a contract. Smart contracts usually have a user interface which can emulate the logic of a contractual clause.

The bank says that it has now digitzed the entire process cycle for bill discounting and has reduced the time for processing these payments to almost real time from the earlier four days. The blockchain will also capture the transaction status along with details and will be transmitted to Bajaj Electricals’ Enterprise Resource Planning software.

YES Bank added that it has put in place a detailed roadmap on commercialising blockchain-based banking solutions in India and is exploring use cases for implementation towards ‘Letter of Credit’ and Documentary Collections, Foreign Remittances and Partnering with Correspondent Banks for Trade Finance among others.

YES Bank has used the Hyperledger Fabric, a blockchain implementation supported by IBM, for developing the application. The bank will also use  IBM’s Watson APIs to create natural language interaction with the partners and external developers, when providing support on queries related to  banking APIs, the Blockchain APIs, how to subscribe etc. IBM has been looking at  “blockchain-as-a-service” to create tools on for solving problems on the supply chain, as indicated by this Ars Technica report.

ICICI Bank’s blockchain transaction

In October last year, ICICI Bank created a blockchain application and piloted transactions on its block chain network in partnership with Emirates NBD, a banking group in the Middle East. In ICICI Bank, the first transaction on the blockchain was executed to showcase confirmation of import of shredded steel melting scrap by a Mumbai-based export-import firm from a Dubai-based supplier.

The second transaction involved a transaction on the blockchain application that enabled an ICICI Bank branch in Mumbai to remit funds to an Emirates NBD branch in Dubai in real time.The blockchain eliminated the need for financial messaging between banks and provides the convenience of instant cross-border remittances for retail customers. Currently, international remittances take a few hours to up to two days.

More suggested reading.

– From Bitcoin to puke-tracking: Walmart uses blockchains to monitor food

 Block Chain 2.0: The Renaissance of Money