Standard Chartered Bank has executed the country’s first blockchain transaction by issuing a Letter of Credit (LC) for Viyellatex Ltd over the Contour blockchain network.
Viyellatex Ltd, one of the country’s leading ready-made garments exporters, imported textile items from Viyellatex Spinning. Standard Chartered Bank acted as the Issuing Bank for the applicant, as well as the Advising Bank for the Beneficiary of the LC. The entire transaction was paperless and completed digitally through Contour’s network, according to a press release.
Contour provides a distributed trade network enabling an enhanced degree of collaboration across the main elements of trade with all participants leveraging the network to create and renew trade data in real-time.
Built on R3’s Corda blockchain, Contour improves data transparency, removes administration costs and reduces friction in global trade: all of this leading to an overall increase in efficiency and reduction in costs for all parties.
As one of the founding members of Contour, Standard Chartered benefitted from Contour’s network which simplifies the LC process, delivering shorter settlement times, instant discrepancy resolution and simplified sanctions screening.
Naser Ezaz Bijoy, CEO of Standard Chartered Bank, Bangladesh said: “We recognize that our clients are increasingly looking for new solutions to address the need for greater efficiency, and that this milestone represents the first of many such transactions that will follow.”
K.M. Rezaul Hasanat, Chairman and CEO of Viyellatex Group said: “We recognize that innovation and digitization is key to remain competitive in today’s ever-changing global trade scenario. Blockchain technology will certainly increase trading efficiency and reduce turnaround time of the LC process.”
Carl Wegner, CEO of Contour said: “Global trade lacks a solution that drives out inefficiencies, improves data transparency and enables interoperability between all trade participants. The long-established elements of trade finance don’t have sufficient integration, ultimately causing friction and unnecessary administration."
He said that these inevitably cause significant barriers for global trade growth, adding complexity, increasing cost and delaying the process for both banks and corporates.
"The Contour network can overcome these issues, providing a consistent and reliable infrastructure for global trade to flourish especially in countries like Bangladesh that counts on LCs for a significant part of their trade volumes. The recent transaction with Viyellatex Ltd serves to prove that a solution is out there and readily available for adoption. It’s also hugely positive to have Standard Chartered introducing this revolutionary technology for trade in Bangladesh and we’re proud to be a part of the first transaction in the country.”
The Ready-made Garments industry is the main export sector of Bangladesh. Most raw materials of this industry are sourced locally, through inland letters of credits.
These inland LCs involve a lot of tedious paperwork. If these transactions can be moved into paperless Blockchain, major efficiencies can be achieved in local trade across this industry.
There is a huge scope to scale up transactions over Blockchain if all parties of the RMG supply chain can be added onto this network.