The two companies aim to develop a cloud-based solution that is a notable departure from existing traditional banking protocols in India, to enable trade finance transactions from suppliers to manufacturers through a permissioned blockchain.
The IBM-Mahindra blockchain solution will enable all parties involved in a supply chain finance solution to act on a singular shared ledger. The supplier and manufacturers will update their individual parts of the transactional process to contribute to a rounded transaction in a process that will ensure increased efficiency and transparency.
IBM elaborates on this with the example of invoice discounting, a common practice in India which is where a finance company issues a loan by taking note of a company’s unpaid settlements from its customers, as collateral. Traditionally, it has proven a cumbersome process where dues can be prolonged and go often unpaid, while errors are commonplace due to different parties maintaining separate and oftentimes inconsistent ledgers. Over a blockchain, however, suppliers will be able to access credit and capital from financiers when transactions and numbers are recorded in a shared ledger in real-time.
Additionally, Mahindra is looking at blockchain solutions beyond the financial sector in the auto and agritech industries.
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