Prominent global financial services company, JPMorgan Chase, has collaborated with six leading Indian banks to launch a blockchain-powered platform that facilitates interbank settlement of dollar transactions.
According to a Bloomberg report published on June 5, 2023, Kaustubh Kulkarni, JPMorgan’s senior country officer for India and vice chairman for the Asia Pacific region, announced that they would be conducting a pilot project in the coming months to evaluate the banking industry’s performance. He noted that JPMorgan would leverage its blockchain platform, Onyx, to launch the pilot project after receiving approval from the International Financial Services Center Authority.
Kulkarni mentioned that this pilot project would involve prominent private lenders such as HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JPMorgan’s own banking unit located at GIFT City.
Kulkarni highlighted that the primary objective of the blockchain project is to enhance the capabilities of the current settlement system. The existing settlement system often experiences delays of several hours, and non-settlements further restrict it on Saturdays, Sundays, and public holidays. However, introducing a real-time blockchain-backed system will eliminate these limitations, enabling round-the-clock availability. The platform will enable banks to facilitate instant transactions around the clock without any time restrictions, thereby ensuring continuous operation throughout the week.
Kulkarni stated:
“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.”
Bloomberg reported that this action would boost New Delhi’s efforts to establish the Gujarat International Finance Tec-City (GIFT City) as an alternative trading hub to Singapore and Dubai. The report also highlighted that the Reserve Bank of India had initiated a domestic non-deliverable forward market settled in US dollars at GIFT City.
Meanwhile, the Reserve Bank of India (RBI)’s Deputy Governor, Mahesh Kumar Jain, has advocated for the integration of blockchain and artificial intelligence (AI) technologies in the country’s banking sector.
During a seminar organized by the RBI for directors of Indian banks, Jain emphasized the importance of harnessing these innovative technologies to ensure sustainable growth and stability, specifically in terms of risk management techniques. He stressed the need to proactively adopt advanced technologies to effectively address potential hazards and overcome emerging risks in the banking industry.
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