Prime Bank becomes first BD bank to execute blockchain LC transaction

Prime Bank has become the first Bangladeshi bank to execute an interbank blockchain letter of credit (LC) transaction improving speed, efficiency and cost-effectiveness of the transaction.

The transaction was conducted with HSBC, which is the first bank in Bangladesh to conclude cross border trade transaction through the network, said the bank in a statement on Wednesday.

The pilot transaction was completed through Contour, the global trade finance blockchain network, whereby an inland LC was opened by Prime Bank on behalf of Ananta Group for import of raw materials for the ready-made garments industry from Tamishna Group, a customer of HSBC Bangladesh.

The end-to-end process of pre-negotiation and drafting of LCs by Importer and Beneficiary, approval, issuance of LCs and presentation of documents were all concluded digitally through Contour’s network.

The transaction required no paperwork or need to physically visit banks.

Instead, all parties involved in the process — buyers, banks and beneficiaries — logged into Contour’s network to carry out any activity.

“Despite advancement in technology, trade has still remained heavily dependent on paper-based process in many parts of the world,” said Faisal Rahman, managing director and CEO (current charge) of Prime Bank.

He added, “As Bangladesh is fast becoming a leading trading country, Prime Bank as a leading trade finance bank in Bangladesh, is exploring ways to get most benefits of digitization in trade frontiers. We are elated to offer our client blockchain LC transaction with support from HSBC and Contour that is real-time, hassle-free, paperless and at the same time low-cost. Today’s success will inspire us and banks in Bangladesh to adopt automation in trade finance to provide seamless services to their valued clients.”

Kevin Green, country head of Wholesale Banking, HSBC Bangladesh, said, “After completing the first successful execution of a cross-border Blockchain Letter-of-Credit transaction recently, this partnership with Prime Bank solidifies our strong commitment to take Blockchain forward in Bangladesh. This is the first inter-bank Blockchain LC transaction for Bangladesh and we believe this will be a major movement towards paperless trade within country.”

Sharif Zahir, managing director of Ananta Group, said, “It was a unique effort and we are very excited to be part of this digital LC transaction with Prime Bank. We welcome adoption of blockchain technology in trade to simplify the process connecting all stakeholders in a single secured platform of Contour. Compared to paper-based LC system, it took very short time to complete the entire process of LC initiation to document submission to acceptance, ensuring all the standard formalities of trade.”

“We have seen that the COVID-19 pandemic has led to an unprecedented push towards digitalization in all sectors. It is high time that international trade also breaks away from paper-based trade and move towards trade digitalization. Etafil Accessories Limited (Tamishna Group) is proud to have collaborated with HSBC and Contour on this historic blockchain LC transaction and we look forward to reaping the benefits of the deployment of distributed ledger technology in day to day trade,” said Naweed Alam Chowdhury, Director of Tamishna Group.

“Our work throughout 2020 has been to improve the processes and overcome the pain points that many companies face. As this transaction has shown, Contour’s network is flexible, able to work for a regional bank or corporate as well as a global trade finance bank or a multinational corporation. Providing a solution that works for everyone is at the heart of what we do and our work with Prime Bank hopes to further this goal,” said Carl Wegner, CEO of Contour.