Major Vietnamese bank HDBank has now become the first in the country to issue letters of Credit (L/C) using the Blockchain.
A January 6 report by local media outlet VietNam News, indicated that the issuance document presentation and successful payment of L/C on the Blockchain marked a major milestone for HDBank. It was a huge step towards the bank’s goal of becoming a “Happy digital bank.”
L/Cs essential for international trade
Letters of credit (L/Cs) are essential when it comes to international trade. L/Cs provide a guarantee from a creditworthy institution such as a bank that a buyer’s payment to a seller will be received on time, and for the right amount.
The new Blockchain L/C in Vietnam saw a local fiber importer and a Taiwan yarn manufacturer become the first participants along with the L/C advising bank in Taiwan. A Blockchain backed L/C like this offers a higher level of security and a permanent record of the transaction. It also reduces the time needed to process such transactions to a matter of hours.
More banks joining the trend
HDBank joins the HSBC-backed Contour network for Loc in May 2020 and has participated in tests done by the Blockchain platform. The bank also becomes one of the few Vietnamese banks that can offer confirmation of Letters of Credit (L/Cs) issued by foreign banks. Bottom-line HDBank will be pioneering the issuance, document presentation and successful payment of L/C on the Blockchain within the South East Asian nation.
More banks have continued to utilize Blockchain-based letters of credit and HSBC is one of those that have advocated for the use of Blockchain technology in the issuance of L/Cs. This trend is expected to continue as Blockchain technology continues to gain popularity.
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