Top-tier Vietnamese bank HDBank has reportedly become the first bank nationwide to roll out blockchain-based letters of credit (LC).
Specifically, the issuance, document presentation and successful payment of L/C on the blockchain has reportedly been viewed as a noteworthy development, on its journey of achieving its goal of establishing itself as a “happy digital bank.”
The entities taking part in the first transaction were reportedly a fiber importing firm in the country, along with a Taiwan-based yarn manufacturer, together with the L/C advising bank in Taiwan.
Letters of credit are reportedly documents with a high level of importance in global trade, offering a guarantee from a creditworthy institution, nominally a bank, supporting a buyer’s payment to a seller to be received according to set timeline and high accuracy on the figure. In essence, the bank underwrites the payment.
Utilizing blockchain for L/C reportedly comes with a wide variety of perks, nominally providing an enhanced level of security and a permanent record of the transaction.
It further brings down the required time to carry out the process for such transactions to a matter of hours.
HDBank reportedly became a member of the HSBC-supported Contour network for L/C in May last year. The R3 Corda-based platform reportedly went through a release process in the second quarter of 2020, after a testing phase carried out in 2019 returned successful status.