JPMorgan will collaborate with several Indian financial institutions, including Axis Bank, ICICI Bank (NASDAQ: IBN), Yes Bank, HDFC Bank (NASDAQ: HDB), and IndusInd Bank. The report noted that the pilot would take place within the confines of India’s Gujarat International Finance Tec-City (GIFT City), an international finance center modeled to compete with Dubai and Singapore.
“By leveraging blockchain technology to facilitate transactions on a 24/7 basis, processing is instantaneous and enables GIFT City banks to support their own time zone and operating hours,” said Kaustubh Kulkarni, an executive at JPMorgan India.
The pilot will run until the end of the year and will seek to improve the present state of interbank transactions, according to Kulkarni. Currently, foreign exchange transactions in India are wrecked by several delays, including non-settlement over the weekends, a drawback associated with the SWIFT payment system.
Kulkarni said leveraging JPMorgan’s Onyx JPM Coin solution will allow for round-the-clock settlement of transactions. However, the blockchain solution will only apply if participating banks have Nostro accounts with JPMorgan and have been cleared by the International Financial Services Center Authority.
The plans for the pilot have been in the works since March, with industry players suggesting that the experiments could be expanded beyond GIFT City. JPMorgan’s ambitious project follows the Reserve Bank of India’s (RBI) decision to begin a U.S. dollar-settled, domestic non-deliverable forward market in GIFT City.
JPMorgan has considerable experience merging finance with blockchain, co-founding Partior, a cross-border payments platform using distributed ledgers for its underlying infrastructure. Leading banking conglomerates DBS Bank, SMBC, and Standard Chartered (NASDAQ: SCBFF) are experimenting with Partior for innovative international settlements.
India – The beehive of blockchain activity
In India, government and enterprises are determined to raise adoption levels in the country. Several blockchain learning modules have been launched to deepen the talent pool in the country despite a hardened stance against digital currencies by the RBI.
Still, the country believes it can attain a 46% blockchain adoption rate through integration in key sectors like supply chain, finance, security, and real estate. Although the RBI and Finance Ministry seem less enthusiastic about adopting blockchain in the financial sector, state and municipal governments are leaning on the technology for record-keeping and streamlining administrative processes.
India will be the biggest blockchain nation in 5 years: IPv6 Forum’s Latif Ladid
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.