HSBC Bangladesh executes first-ever crossborder blockchain LC transaction

Dhaka (Oct 31, 2020): HSBC hits another blockchain milestone in the successful execution of the first-ever crossborder Blockchain letter of credit (LC) transaction in Bangladesh.

The transaction involved the import of 20,000 tonnes of fuel oil by United Mymensingh Power Limited Bangladesh from Singapore, for their power plant, a development that has reduced LC processing time at least to one-fifth from the present time.

This is the first time a crossborder blockchain transaction has been executed in Bangladesh. The transaction was completed using the Contour platform and the LC processing time was reduced from the standard 5-10 days to less than 24 hours, according to a statement issued by HSBC Bangladesh.

Md. Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, is excited to see that HSBC has pioneered Bangladesh’s first-ever crossborder blockchain LC transaction.

“This showcases our strong commitment and ability to support crossborder trade by Bangladeshi businesses using cutting-edge technology platforms,” Rahman said.

“I believe this will usher in a new era of routing international trade transactions as businesses and governments recognise the transparency, security and swiftness in performing tasks using blockchain technology.”

This marks a significant step for Bangladeshi companies in the digitisation of trade. It makes doing business simpler and faster by reducing transaction times and boosts working capital efficiency, something that’s especially appealing to local firms navigating through the current economic challenges.  

Moinuddin Hasan Rashid, Group Chairman and Managing Director of United Group, said “We are very enthusiastic over the use of blockchain technology for our imports. We understand that we are headed towards a digital era and we are ready to evolve in our effort to adapt to the changes”.

He said fuel oil LCs are highly time-sensitive where every second counts and he believes this blockchain technology will help them to manage time efficiently and also ensure increased efficiency and better cost management.

For the first half of 2020, Bangladesh’s trade under LCs was over $34 billion, according to SWIFT. So, the potential efficiencies for domestic companies are tremendous.

HSBC has effectively pioneered Blockchain platform in many countries, including India, Dubai, Malaysia, Oman, Saudi Arabia, Singapore, South Korea and Vietnam. The Contour platform is built using R3’s Corda Blockchain technology. It links together banks and corporates on a decentralised trade finance network.