[DOCUMENT TITLE]

Social Media, Mobility, Analytics,

Cloud and Blockchain

Submitted To,

Malathi Sriram
Associate Professor – Systems

Submitted From,
SUMANTH DUTTA U 20177

SACHIN K S 20165

RAHUL B S 20150

MANASVI N A 20028

ANJAN RAM A 20130

JANUARY 31, 2022
SDMIMD
Mysore
Role of Blockchain in banking sector

Major banks and financial organizations are realizing that blockchain technology has the potential to
drastically increase the efficiency of their procedures, especially in cross-border payments, while also
lowering costs.

Now, blockchain technology is sweeping the internet and even banking industries. The World Economic
Forum considers blockchain to be the "heartbeat" of the financial sector, indicating that this technology
is important in the industry. At its best, the technological revolution transforms the banking sector.

The use of a blockchain to conduct transactions eliminates the need for a financial institution to act as a
middleman. Even if there is no third party to confirm the fraudulent transaction, it eliminates the
possibility of fraud.

Industry Segment Usage

 By 2022, worldwide spending on blockchain solutions will reach $11.7 billion.

 Blockchain can reduce 30% of banks’ infrastructure costs.
 Banking sector alone could generate up to $1 billion
 The global blockchain market size to grow at a CAGR rate of over 69% between 2019 to 2025.
 Most prominent investors in blockchain technology are in the financial sector with a market
share of 46%. (Petrov, January 17, 2022)

What is the Indian Banks doing in the domain of Blockchain Technology?

1) RBI or Reserve Bank of India: The IIDRBT or India’s Institute for Development and Research in
Banking Technology (part of RBI).
2) YES Bank: Before disbursing working capital loans, the existing invoicing process takes four days
to verify, present, record, and reconcile bills. The bank will save time and money by
implementing this technology.
3) Axis Bank: Axis bank is using Ripple (Ripple’s enterprise blockchain technology solution) for
cross-border transaction network to run its remittance blockchain products (Bank)
4) ICICI Bank: Authenticatication of ownership of assets digitally and execute a trade finance
transaction through a series of encrypted and secure digital contracts.
5) SBI or State Bank of India– It is also planning to use blockchain for smart contracts or KYC.
(blockchain council )

Role of Blockchain in Security : Blockchain can provide advanced security controls by using public key
infrastructure to authenticate parties and encrypt their communication. However backup storage of
private keys in secondary storage poses theft of private keys as a high risk. To prevent this, key
management procedures such as IETF(Internet Engineering Task Force) or RFC( Request for Comments)
and cryptographic algorithms based on integer factorization problems should be implemented.

( https://www.youtube.com/watch?v=5XtvHJbq5kw)

1) Settlement of payments

2) Identity verification

3)Fraud reduction
Why do Banks need to make a switch to Blockchain?

 Distribution and Decentralization being the core concept

 Innovative and a continuous learning entity
 Enables smart contracts to cut out the middleman in many industries scenarios
 Embodies the definition of security
 Streamlines process like financial transactions (blockchain)

Indian digital currency scenario

Digital currency is `a form of currency that exists only in digital or electronic form and that can operate
independently of a central bank.

What are the types of digital currency?

Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency.
Digital currency may be recorded on a distributed database on the internet, a centralized electronic
computer database owned by a company or bank, within digital files or even on a stored-value card

Digital money can either be centralized, where there is a central point of control over the money supply
(for instance, a bank), or decentralized,

Is RBI planning a digital currency for India?

Government has received a proposal from Reserve Bank of India (RBI) in October, 2021 for amendment
to the Reserve Bank of India Act, 1934 to enhance the scope of the definition of 'bank note' to include
currency in digital form.

The Reserve Bank of India (RBI) is working on a plan to introduce a central bank digital currency (CBDC).

What is RBI digital currency?

The CBDC is a digital form of fiat currency which can be transacted using wallets backed by blockchain
and is regulated by the central bank.

CBDCs enable the user to conduct both domestic and cross border transactions which do not require a
third party or a bank

How does a CBDC work?

A central bank digital currency (CBDC) is an electronic form of cash that can be exchanged much like you
exchange traditional “money”. ... In the case of CBDC, a central database ultimately controlled by a
central bank issues the currency and provides every “e-dollar” or “e-yuan” with a unique serial number
to identify it.
Introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on
cash, higher seigniorage due to lower transaction costs, reduced settlement risk. Introduction of CBDC
would possibly lead to a more robust, efficient, trusted, regulated and legal tender-based payments
option. There are associated risks, no doubt, but they need to be carefully evaluated against the
potential benefits.

Do we need CBDC in India?

India is leading the world in terms of digital payments innovations. Its payment systems are available
24X7, available to both retail and wholesale customers, they are largely real-time, the cost of transaction
is perhaps the lowest in the world, users have an impressive menu of options for doing transactions and
digital payments have grown at an impressive CAGR of 55% (over the last five years

A survey conducted by the Reserve Bank on retail payment habits of individuals in six cities between
December 2018 and January 2019, results of which were published in April, 2021 RBI Bulletin (please see
charts below) indicates the preferred mode of payment and for receiving money in retail sector

for regular expenses. For small value transactions (with amount up to ₹500) cash is used predominantly.
 Conclusion
• We can sum up by saying that the crux of the matter is that India's banking system is utilising
blockchain technology to assist clients as well as to develop a network that is considerably more safe
and secure than present methods.

• The blockchain will have a significant impact on the banking industry.

• Different banks should construct and exchange a secure, distributed database of client information,
which will help to reduce time, effort, and cost in interbank transactions.

• In order to move towards a cashless society, now is an excellent time to begin necessary efforts to
digitize the Indian Rupee using blockchain technology. (Gupta, June 4, 2018)