A report from a Chinese news site states that one of China’s “big four” banks has trialled a loan issuing system using blockchain. ABC – The Agricultural Bank of China – issued a $300,000 loan using agricultural land as collateral, using high-profile nodes hosted by the Land and Resources Bureau of the region and the People’s Bank of China. The issuance took place in a local branch in the Guizhou province, which is located in southwestern China.
The bank has 320 million retail customers, 2.7 million corporate clients, and nearly 24,000 branches throughout mainland China, Hong Kong, London, Tokyo, New York, Frankfurt, Sydney, Seoul, and Singapore.
In order to facilitate the loan issuance, the bank deployed a blockchain system across various node partners, including other commercial banks, the provincial branch of the People’s Bank of China, the Land and Resources Bureau and the Agriculture and Animal Husbandry Bureau.
Should the trial prove successful, it is thought that ABC will expand the system to other sectors, including real estate. For the moment however, its main focus is to get the system set up for agricultural-backed loans.
The bank said the trial proved that blockchain can help streamline the process of approving loans by keeping all involved parties updated with the data of the borrowers and their collateral on a distributed ledger. The technology also eliminates the problem of double spending by allowing borrowers to use the same piece of land as collateral to apply for loans from different banks.
The ABC’s annual filing published early this year shows the state-owned entity has also developed a decentralized network to issue small unsecured loans to agricultural e-commerce merchants via an automated process.
Currently, out of the 26 publicly listed banks from China, 12 of them have already started working on blockchain technology.