The Finance Ministry's FinTech report, under the Department of Economic Affairs, did not provide any concrete recommendations for blockchain in India, though it laid out applications of blockchain in fintech, and in MSMEs and government. It recommended formation of an inter-ministerial group under MeitY to explore the use of blockchain, among other technology. Current usage of Blockchain As per the report, some major fintech applications where blockchain is generally being deployed as follows: 1. Cross-border payments: The report suggested that blockchain-based solutions related to issues with cross-border payments could encompass the following features: Exclusion of intermediaries and direct transaction between parties Intra-day liquidity need not be ensured with central banks as all stakeholders will hold a copy of balances and transactions of every participant. Encryption will nearly eliminate the possibility of modification of data and will maintain an immutable audit trail Private or permissioned blockchains, only limited to stakeholders, will address data protection and privacy concerns Consensus-based validation of transactions will allow for immediate updation of transaction trail Use of digital tokens resolve the issue of multiple currencies, improves liquidity and capital compliance costs, allows for micro-payments and expedites the payment process, which further eliminates liquidity risks 2. Settlement of securities: Blockchain would allow for distributed and decentralized records. Multiple intermediaries makes transactional and final settlements complex. In private blockchain, the system will store and facilitate KYC data across all nodes. History of payments and transactions maintained on the blockchain will enable transparent supervision for auditor and regulators. 3. Trade finance:…
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