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Vietnamese bank issues its first letters of credit on the blockchain

Major Vietnamese bank HDBank has now become the first bank in the country to issue letters of credit, or L/C, using blockchain technology.

According to a report by local media outlet Việt Nam News on Jan. 6, the issuance, document presentation and successful payment of L/C on the blockchain marks a major milestone on HDBank’s stated goal, to become a “Happy digital bank”.  

According to Cointelegraph, the participants in the first transaction were a local fiber importer and a Taiwanese yarn manufacturer, along with the L/C advising bank in Taiwan. 

Letters of credit are important documents in international trade, providing a guarantee from a creditworthy institution like a bank, that a buyer’s payment to a seller will be received on time and for the correct amount. Indeed, the bank underwrites the payment.

Using blockchain technology for L/C has many benefits like offering a higher level of security and a permanent record of the transaction. It also reduces the time needed to process such transactions to a matter of hours. 

In May 2020, HDBank joined the HSBC-backed Contour network for L/C back.

The R3 Corda-based platform received a commercial launch in Q2 2020, following a successful trial in 2019.


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