Several leading corporations in India are experimenting with the use of blockchain technology as a tool to optimize the utilization of working capital, B2B interaction, invoicing, and payments. The companies are doing this while being cautious of regulatory situations in the country, according to India Times.
Blockchain progressing despite unclear regulations
Citing sources close to the issue, India Times reported that, despite current cryptocurrency prices, companies and banks are still aiming to utilize cryptocurrencies and blockchain technology in their internal operations. According to the report, Hindustan Unilever Ltd (HUL), Reliance Industries Ltd, HDFC Bank, and ABG Shipyard are just some of the companies experimenting with the adoption of blockchain technology for internal treasury management in an effort to boost their record keeping processes.
HUL revealed that it is looking to increase its digital capabilities. One source stated that “the cryptocurrency would only be used by the companies and banks internally. It will mainly be effective as a working capital management tool, where rather than actually transferring money, cryptocurrency will be transferred, and accounts shall be reconciled at a later date.”
The various companies and banks that are participating in these pilot projects have yet to set an exact implementation timeline. However, the benefits are clear: using blockchain technology for record keeping reduces the possibility for discrepancies. The technology’s security features further make blockchain particularly useful for large companies with a high level of data flow.
While companies are still testing the implementation of this technology, insiders suggest that the results are promising so far.
Sai Venkateshwaran, partner and head of CFO Advisory at KPMG India, stated that “several large companies are evaluating various use cases of blockchain, including in areas such as managing intra-group transactions and as a logical extension, looking at its use as a group treasury management tool for more efficient cash and working capital management. Apart from greater efficiency and accuracy, it has the potential to bring enhanced levels of transparency for group treasury management and also cost savings.”
Hindustan Unilever is said to be looking into blockchain technology for B2B payments. Stakeholders believe that blockchain technology and cryptocurrencies will have a big future in India despite the lingering regulatory uncertainty.
Legal issues to be considered
Despite recorded progress, the companies remain concerned about the Reserve Bank of India’s guidelines on cryptocurrencies. Yet some industry experts believe that this should not affect a company’s use of crypto and blockchain.
Vivek Belgavi, partner and fintech leader at PwC India, stated that “many banks and consortiums like BIC (Blockchain Investors Consortium) have also tried to bring in blockchain technology in the trade finance area and results are positive especially around ecosystems like buyer-supplier or logistics. The concern for the regulators is the speculation that was happening in Bitcoin or the other cryptocurrency. There is no problem with using the underlying blockchain technology.”
Other industry experts have advised the companies to tread carefully due to the various legal and regulatory requirements.