World’s third largest bank issues landmark $300K farmland loan through blockchain trial

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The E-Blockchain Loan system hopes to streamline loan approval processes, and enable small and medium agricultural enterprises to access financial services despite a lack of credit history.

Financial News China reported yesterday that state-owned Agricultural Bank of China (ABC)—the world’s third largest bank by assets, has begun testing its E-Blockchain Loan solution by issuing a RMB2,000,000 ($294,105) agricultural land mortgage loan. This is the first of its kind to be issued, and will benefit husbandry and agriculture, including the local tea industry.

ABC hopes that the new system would streamline loan approval processes, which at their current state, involve several intermediaries and take weeks or even months to get to approval. Blockchain technology’s benefits for identity systems and verification, as well as security have made ABC take the jump. The move will also cut down the need for queues for applicants in their branches. Ultimately, this would extend financial inclusion to small and medium-sized agriculture enterprises who have not been able to easily access financial services due to a lack of credit history.

Since last year, ABC has been working with a rapidly growing Hangzhou-based blockchain platform developer called HyperChain to create the E-Blockchain Loan system. HyperChain’s creator, Qulian Technologies, recently secured RMB1.5 billion ($235 million) in their Series B funding round—increasing its valuation three-fold within just over two months.

China’s relationship with blockchain has been quite the ride this year. First came the crackdown against ICO’s, then all other cryptocurrencies, and later stifling the mining industry as well. But despite this, blockchain technology has remained on the good side of the Chinese government. China’s central bank, the People’s Bank of China (PBoC), recently announced that they have finished the development of a blockchain system that would digitize checks through smart contracts. The project hopes to help curb instances of fake checks and fraud.

Apart from this, millions of dollars has also been dedicated to attract talent and start-ups into the newly opened Hangzhou Blockchain Industrial Park. And a few months ago, President Xi Jinping also acknowledged blockchain technology as a special area of interest that the government must pursue.

“The new generation of information technology represented by artificial intelligence, quantum information, mobile communication, internet of things, and blockchain accelerate the breakthrough in application and bred new life science fields represented by synthetic biology, gene editing, brain science, and regenerative medicine,” President Xi said in a speech in a conference by the Chinese Academy of Sciences last May.

“If China is to flourish and rejuvenate, it must vigorously develop science and technology and strive to become the world’s major scientific center and innovative highland. We are closer to the goal of the great rejuvenation of the Chinese nation than at any time in history. We need to build a powerful world of science and technology more than any other time in history.”