Vendor financing is essentially the lending of money by a company to one of its customers, so the latter can purchase products from the company, driving sales for the former.
To develop the solution, Yes Bank sourced technology from the Linux Foundation-led open-source blockchain project, Hyperledger. The blockchain solution made use of smart contracts developed by Fintech startup Catenia Technologies to deliver a vendor financing solution for major Indian electrical equipment manufacturer Bajaj Electricals.
Bajaj’s business interactions that include discounts and disbursal of funds to its vendors will be digitized over the blockchain, allowing for faster, more efficient record keeping and increased transparency. Yes Bank’s anchor client (Bajaj Electricals), will see automatic debits from its account at the bank, as a part of the automated smart-contract enabled blockchain transaction.
The blockchain implementation was heavily facilitated by technology partner IBM. Hosting the blockchain over its “Hybrid Cloud” platform, Yes Bank also leveraged IBM’s “Watson Conversation” a cloud-based cognitive service to further enhance the user experience of participants (bank, the vendor and borrowers or purchasers) in the blockchain.
In recent news, IBM has also partnered major Indian conglomerate Mahindra to bring supply chain financial solutions in the country for small and medium-sized enterprises.
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