The HSBC UK headquarters are seen at the Canary Wharf financial district of London, July 31, 2018 TOLGA AKMEN/AFP/Getty Images

HSBC India executed an export-related trade finance transaction for Reliance Industries and an American client of the company using blockchain, which cut down heavily the time taken for processing the documents, a report in the Business Today (BT) said.

The blockchain-enabled letter of credit (LC) transaction facilitated a shipment between Reliance and the US-based Tricon Energy. ING Bank issued the LC for Tricon Energy and HSBC India was the advising and negotiating bank for Reliance Industries. The end-to-end transaction was executed on R3’s Corda, a blockchain platform.

The Letter of Credit transaction was an end-to-end trade between a buyer and a seller and their respective banking partners, completed on a single shared application rather than multiple systems. The BI report said the LCs previously were sent to each party in the transaction by post, courier or fax. With this, the banks seem to acknowledge that the time and cost involved in processing paper documents are often obstacles for exporters and delays the movement of trade.

“This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation. This solution is a significant improvement for any organization involved in buying and selling goods internationally, as it truly brings together all parties onto one platform,” HSBC India said.

“The use of blockchain is a significant step towards digitizing trade and enables greater transparency and enhanced security in addition to making it simpler and faster," said Hitendra Dave, head of Global Banking and Markets, HSBC India. Srikanth Venkatachari, Joint Chief Financial Officer - Reliance Industries, said the use of blockchain offers vital potential to reduce the time involved in the exchange of export documentation from the current 7-10 days to less than a day.

R3, HSBC, ING, Bangkok Bank, BNP Paribas, CTBC Holding, NatWest, SEB, and Standard Chartered also support the Corda application and plan to expand the network on an open source basis to drive blockchain adoption across the industry.

This is the first time that HSBC India had performed such a transaction. But HSBC and ING have earlier executed a trade with the use of blockchain. On May 14. HSBC and ING Bank had completed a live trade finance transaction for international food and agriculture conglomerate, Cargill, using R3’s Corda. This blockchain transaction included a bulk shipment of soybeans from Argentina, through Geneva’s trading arm of Cargill, to Malaysia, through Cargill’s Singapore subsidiary as the purchaser. The two banks were working on behalf of the Cargill entities.

Blockchain is also utilized by other companies, such as Walmart, which uses blockchain to keep a record of its pork — sourced from China. The blockchain tracks each piece of meat, its origin, processed date, stored date, and sell-by-date. Unilever, Nestle, Tyson, and Dole also use blockchain for related purposes.

Shares of HSBC closed 0.99 percent higher Friday on the New York Stock Exchange, though they fell by 0.86 percent in after-hours trade. The overall NYSE Composite Index closed down 0.28 percent Friday.