- Yes Bank has facilitated of INR 100 Cr using blockchain technology for Vedanta
- Commercial paper is an unsecured money market instrument issued in a promissory note
- Blockchain in CPs will help reduce the turnaround time for issuance and redemption.
What appears to be in a first in Asia, Indian private sector bank Yes Bank has facilitated the issuance of a commercial paper (CP) of INR 100 Cr using blockchain technology for Vedanta Ltd, a natural resources conglomerate.
Usually not backed by any form of collateral, a commercial paper (CP) is an unsecured money market instrument issued in the form of a promissory note. According to SEBI, the minimum credit rating of the companies seeking commercial paper must have the minimum credit rating of A-2.
Amid the CP market slow down, Yes Bank, an issuing and paying agent (IPA) has facilitated the issuance digitally, using R3 Corda enterprise blockchain platform developed by US-based MonetaGo. The blockchain platform, thus, ensures an efficient, transparent and secure mechanism for CP issuance and redemption.
Why Blockchain For Commercial Paper?
While finance minister in the Union Budget 2019 has addressed liquidity crisis to some extent through bank recapitalisation, this crisis had badly hit the issuance of Commercial Paper by financial firms, in recent months. According to data compile by Edelweiss, financial companies sold INR 54,113 Cr of commercial papers in October 2018 which was 65% down compared with INR 1,53,165 Cr of average monthly sales in July and August.