- JPMorgan collaborates with six Indian banks to implement a blockchain platform for rapid interbank US dollar transactions in India’s new international financial hub.
- The new blockchain-based system will enable round-the-clock interbank dollar payments.
JPMorgan collaborates with six Indian banks to create a blockchain-driven settlement platform for interbank dollar transactions. This partnership aims to leverage JPMorgan‘s expertise and potentially contribute to the development of Gujarat International Finance Tec-City (GIFT City) as a prominent fintech hub in the region.
In a recent interview, Kaustubh Kulkarni, JPMorgan’s Senior Country Officer for India and Vice Chairman for Asia Pacific, unveiled plans for a pilot project at the core of this initiative. The objective is to acquire comprehensive insights into the bank’s encounters with the innovative system.
JPMorgan will collaborate closely with India’s prominent private financial institutions, including HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, and IndusInd Bank, as well as its own banking unit based at GIFT City.
Banks operating in International Financial Services Centres (IFSCs) like GIFT City are now able to trade foreign exchange derivatives on the domestic non-deliverable future market that was recently launched by the Reserve Bank of India.
Forex contracts involving the rupee must settle in dollars, which is typically only possible during U.S. banks’ regular business hours. However, Onyx JPM Coin bank account holders of JP Morgan can conduct transactions around-the-clock.
The primary objective of the project is to enable real-time settlement of dollar trades, eliminating the current time-consuming process that takes several days and is limited to working weekdays. Kaushik Kulkarni, JPMorgan’s senior country officer, explains that the blockchain project aims to enhance the capacity of the settlement system.
In the existing settlement system, completing dollar settlements in India can be a time-consuming process, often taking several hours. Furthermore, the current system does not support settlement activities during weekends and public holidays.
The new platform will empower institutions to conduct instantaneous transactions round the clock, every day of the week. Currently, interbank settlement transactions can take several hours, and settlement is not available during weekends and public holidays. The blockchain-based system aims to address these limitations and revolutionize the efficiency of settlement processes.
Only interbank payments where the other banks have Nostro accounts at JP Morgan, like in this instance, are eligible for use of the Onyx JPM Coin system. JP Morgan also contributed to the founding of Partior, which uses a blockchain infrastructure to target wholesale cross-border payments.
India is making significant strides in the blockchain and cryptocurrency domain, showcasing progress and development in the field. The country has been actively exploring and adopting blockchain technology, with various sectors and industries recognizing its potential.
Back in April , Gemini, a cryptocurrency exchange based in the US,also announced plans to open a new engineering center in India in order to access the nation’s talent pool of top tech professionals.