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BankChain Project Launches Blockchain Exchange for Stressed Assets

Primechain Technologies, a Mumbai-based startup that operates India’s BankChain consortium, has launched a blockchain system for the trading of so-called “stressed” assets.

The project, built on a blockchain called Primechain-ASSET, will see the creation of an exchange for selling and buying stressed assets, said Sudin Baraokar, innovation adviser at State Bank of India, a member of BankChain.

Stressed assets include non-performing assets (NPAs), restructured loans, assets under reconstruction and written-off assets.

Allowing banks to divide up stressed assets and sell them to other banks, asset reconstruction companies or funds, the blockchain platform comprises a smart contract-powered auction system, built-in regulatory reporting and other features. The blockchain will also offer a repository for documents related to the assets, according to the release.

Baraokar continued:

“This [project] will help banks get a more data and market-driven price discovery of stressed assets and will automate and bring a more orchestrated effort for sale of Non-Performing Assets (NPAs). By leveraging blockchain, we can then continue to develop more structured products once we have a Loan Asset Exchange system in place.”

NPAs have come into limelight recently, as an observed decline in asset quality has been touted as an economic risk for banks.

“Stressed assets have become a multi-trillion dollar challenge for the global banking sector. The gross non-performing assets of the banks in India are over Rs. 8 lakh crore [$123 billion],” Shinam Arora, CEO of Primechain, said in the statement.

Also addressing the issue, the Reserve Bank of India last month issued a reassessed framework for banks, allowing early detection and identification of stressed assets.

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State Bank of India to Beta Test Blockchain Smart Contracts Next Month

The State Bank of India (SBI) is planning a beta launch of smart contracts by next month, with blockchain-based know-your-customer (KYC) processes soon after.

According to Sudin Baraokar, head of innovation at SBI, the systems have been developed by Bankchain – a consortium of 27 banks that was launched in February to explore blockchain solutions for the banking sector.

Baraokar said that the beta launch of smart contracts in the bank’s processes will enable “simple things” such as non-disclosure agreements, Economic Times reports.

He added:

“A lot of internal processes can be contracted. We do a lot of IT procurement, a lot of it can be implemented using blockchain.”

Talking about the benefits of the Bankchain project, Baraokar said that the group shares technical expertise and allows SBI to focus on new solutions. These include smart contracts, which he said are “not regulatory heavy.”

SBI has also revealed plans to set up an innovation center in Mumbai to explore new technologies like blockchain, artificial intelligence, machine learning, among others. The hub is expected to host hackathons and incubate startups, drawing on both internal experts and outside vendors.

The innovation center is currently in the design stage and is expected to launch by the middle of next year, according to Baraokar.

Back in May, Bankchain launched a KYC platform called ClearChain, aimed to allow banks to share information about customers. The system reportedly allows for the exchange of customer information, including data on wire transfers and investigatory reports, including Suspicious Activity Reports (SARs).

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