For Bengaluru-based jeweller Ramesh Davanam, the one constant in his 35-year career has been the need to secure working capital from banks. And while Davanam’s banking partners have changed over the decades, the process of accessing this capital has remained as arduous as ever.

The physical documentation required runs into over 100 pages, Davanam told The Ken. This includes three years worth of balance sheets, external credit ratings, proof of inventory for collateral, the personal balance sheets of the business owner, and detailed business projections for the next five years.

And this is just to get the ball rolling.

Davanam isn’t alone in this. The jewellery sector at large is dependent on this sort of financing, with businesses in the space constantly having to jump through these hoops to secure critical working capital. For smaller businesses in the space, said Ashish Pethe, this can take up to two months. Pethe is chairman of the All India Gems and Jewellery Domestic Council, which represents about 300,000 gems and jewellery businesses in India.

This drawn-out process is the result of how, even as retail banking in India has embraced digitisation, slow, heavy processes are hardcoded into trade finance. It remains heavily reliant on couriering documents around and acquiring wet signatures. The inefficiency of the whole process puts businesses, especially smaller enterprises, in jeopardy.

Now, after decades of plodding inefficiency, change is on the horizon. With an eye towards removing some of these hurdles, 18 banks have decided to back a new consortium—the Indian Banks’ Blockchain Infrastructure Company (IBBIC). The group aims to develop a distributed ledger system distributed ledger system Distributed ledger system A digitial system built to record asset transactions in multiple location simultaneously. Prominent examples of distributed ledgers include the Bitcoin and Ethereum blockchains. to issue and track domestic letters of credit (LCs), a form of trade finance where banks guarantee payment.

IBBIC has multiple marquee stakeholders—State Bank of India (SBI), ICICI Bank, Axis Bank, HDFC Bank, and Kotak Mahindra. As per its current plans, IBBIC will start with setting up a messaging system between members that can be used to transmit certified documents and automate payments between buyers, suppliers, and associated banking partners. Each member of the consortium has ponied up ~Rs 5 lakh (US$ 6,700), and will invest a further Rs 5 crore (US$ 670,000) into IBBIC, which is billed as a “financial technology company,” in regulatory filings.

Put simply, a distributed ledger [DL] enables simultaneous record keeping at different financial institutions. This establishes a shared source of information instead of transaction details floating around on siloed back-end systems across banks.

AUTHOR

Jaspreet Kalra

Jaspreet covers banking, financial technology and digital assets. He is a graduate of St. Stephen’s College, Delhi and Columbia University’s Graduate School of Journalism. Jaspreet has previously worked with CoinDesk and Bank Automation News. When unoccupied with work, he can be found pretending to read hardbacks while listening to stand-up specials.

View Full Profile

Read this story. Subscribe Now

This story is available across both editions. Subscribe to the one that’s most relevant for you. Questions?

Pick an edition

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at support@the-ken.com detailing the error or queries.