As part of the transaction, United Mymensingh Power LTD imported 20,000 tons of fuel.
HSBC Bangladesh executed this transaction using the Contour platform.
According to United Group CEO, the block chain will help to manage time efficiently while reducing costs.
HSBC Bangladesh has completed the first cross-border Letter of Credit (LC) transaction on block chain basis in Bangladesh. A report unveiled this news on November 1 and found that the transaction involved United Mymensingh Power LTD, a Singapore-based energy company. It was reported that the company imported 20,000 tons of fuel for its power plant as part of the transaction.
According to the report, the use of the block chain helped to minimize LC processing time from the current 5-10 days to less than 24 hours. The bank executed the transaction using the Contour platform, which runs on R3’s Corda block chain technology. The platform is owned by eight banks, including HSBC, ING and Citi, and is designed to connect a network of banks, businesses and digital solutions around the world.
Md Mahbub ur Rahman, CEO of HSBC Bangladesh, commented on this development,
“This demonstrates our strong commitment and ability to support the cross-border trade of Bangladeshi companies using state-of-the-art technology platforms. I believe that this will herald a new era in the handling of international trade transactions as companies and governments recognize transparency, security and speed in performing tasks using block chain technology. I am very pleased that HSBC has pioneered the first cross-border block chain LC transaction in Bangladesh”.
Simplifying business processes
According to HSBC, this step is a significant milestone for Bangladeshi companies in the digitalization of commerce. The bank expects that companies will be able to conduct business seamlessly by accelerating transactions and reducing costs. HSBC noted that these improvements will help to increase the efficiency of working capital, an advantage that is reportedly attractive to local companies seeking to find a way through the current economic challenges.
Moinuddin Hasan Rashid, Chairman and CEO of United Group, explained how block chain-based cross-border LC transactions will boost trade,
“Fuel oil LCs are very time sensitive, where every second counts, and United Group believes that block chain technology will help manage time efficiently and ensure greater efficiency and better cost management.
Rashid added that the organization is excited about using the block chain for its imports. He went on to quote that United Group is aware that it is heading towards a digital time and is ready to make the appropriate changes to adapt.
This news comes after SWIFT, a global provider of secure financial messaging services, estimated that Bangladesh’s trade among LCs was worth more than £26 million in the first half of 2020. HSBC Bangladesh therefore believes that the potential efficiency benefits for local businesses are significant.