Joining the Blockchain

Every bank's core banking system does a lot - it records all transactions and updates customers' accounts and other financial records. But what it can't do is view a customer's relationship with other banks. A customer could submit tax relief documents (Form 15 G/H and others) at multiple financial institutions, and this poses a challenge for banks while validating the customer's tax documents. The absence of real-time reconciliation among financial institutions can lead to potential tax pilferage.

This was a hurdle that DCB Bank, a new generation private sector bank with 334 branches across India, faced. "The challenge was to verify tax certificates issued by the tax department and authenticate tax returns," says Prasanna Lohar, Head of Technology, DCB Bank. The bank thought of implementing a secure platform where the tax department, various banks and other financial institutions could collaborate and share data in real-time without compromising privacy of customers or revealing a bank's business-sensitive information.

DCB approached IT major Infosys in mid-2019. The bank decided to implement a blockchain-based solution. "This has a single version of data that all stakeholders can access collaboratively. The blockchain smart contract (a self-executing contract that controls the data and makes transactions trackable and irreversible) provides a consolidated summary of an individual's transactions across financial institutions and provides a single view of certificates available to the (tax) assessing officer and deductors. This eliminates discrepancies, over-utilisation and tax leakages," says Gopikrishnan Konnanath, Senior Vice-president and Service Offering Head-Blockchain and Oracle Services, Infosys.

The DCB solution is in the pilot stage. Once it becomes fully functional, the bank will be able to collaborate with income tax systems without any impact on current workflows or processes and without compromising on security and privacy. "Also, tax authorities will be able to track income and assets information in near real-time. They will also be able to monitor the usage of rebates provided to taxpayers through tax deductors," says Lohar. "This also helps us lend confidently as income-related information provided by taxpayers is authenticated instantly over the network by authorities. We can procure online approval in real time from tax authorities when properties of corporates are mortgaged," he adds.

DCB is just one of the many companies to have jumped on to the blockchain bandwagon. Recently, retail giant Walmart said it was piloting blockchain technology for end-to-end traceability of shrimp sourced in Andhra Pradesh and shipped to the US. This will help the shrimp supply chain and reinforce customer trust in the product, it said. More information can be a step towards promoting India as a preferred source of seafood, while also enhancing food traceability and transparency for consumers. Walmart has been collaborating with IBM for use of blockchain for enhancing global food traceability since 2017.