To prevent frauds such as the recent multi-billion dollar Letters of Undertaking (LoU) scam, startup Primechain Technologies has launched Primechain-GUARANTEE, a blockchain for recording LoU, Bank Guarantees, Letters of Credit and other Documentary Credits.
The LoU scam took place because fraudulent bank employees issued LoU without following the processes, without securing adequate collateral and without recording the transactions in the bank’s core banking systems. An LoU is a guarantee, by the issuing bank, to the receiving bank and the companies that it would undertake to pay a certain amount of money on a specific date.
This is a blockchain repository of Bank guarantee, Letter of credit, Commercial Invoice, Transport Document covering at least two different modes of transport, Bill of lading, Non-Negotiable Sea Way Bill, Charter Party Bill of Lading, Air Transport Document, Road Transport Document, Rail Transport Document, Inland Waterway Transport Document, Courier Receipt, Post Receipt or Certificate of Posting, Clean Transport Document and Insurance Document and Coverage.
Says Rohas Nagpal, Founder, Primechain Technologies, “Each entry on the blockchain is digitally signed by the member bank. Regulator nodes enable real-time supervision by the authorities. The system is API driven and can easily be integrated with the banks’ core banking and other legacy systems.”
The bank guarantee, and other related documents are stored in the blockchain in an encrypted form and can only be viewed by banks that have been “whitelisted” by the issuer bank. This ensures data privacy and confidentiality while at the same time preventing frauds