Page 41 - Banking Finance February 2025

ARTICLE

of blockchain and is planning to implement it in maintaining Technological Hurdles
land records. This land record project is using blockchain There are separate issues with separate institutions like
technology to create a tamper-proof record of land scalability, interoperability and integration of blockchain
ownership in the Chikkaballapur district in Karnataka. This with existing system, which create hindrance in adoption of
project is meant to prevent fraud and corruption, and it will blockchain in Indian banking.
also make it easier for citizens to access their land records.
To overcome technological barriers, banks should implement
Bangaluru based Centre of Excellence in Blockchain efficient scalability solutions, focus on industry-wide
Technology (CoEBT) is a National Informatics Centre, GoI standardization to promote interoperability, and develop
initiative to focus on advancing Blockchain Technologies, robust integration practices that minimize disruption to
platforms, systems and assets to develop Industry existing banking infrastructure.
understanding. The institute is committed for
implementation and development of innovative blockchain Conclusion:
solutions from proof of concept to production.
Blockchain or distributed ledger technologies is synonymous
with cryptocurrency, such as Ethereum and Bitcoin, but there
In a recent development, RBI has issued its digital currency
are several other uses of the technology, especially in
(e Rs.) on 01 December 2022, which is using Blockchain
banking, which is already revolutionising the industry in the
distributed ledger technology. This currency is brought after
west. The technology, however, is in its early stages in India
the GoI proposed a bill to impose ban on cryptocurrencies
and responsible adoption can bring considerable
in January 2021.
improvement. Government of India is also considering
Blockchain as a potential gamechanger in Banking and
Challenges in Blockchain:
Finance industry and so CoEBT in Bengaluru has been set
Like other technology, the Blockchain has its own set of up for establishing coordinated & interoperable blockchain
advantages and disadvantages. There are several risks and ecosystem across the country. RBI has also issued 'e Rs.',
challenges, which are required to be addressed. Few of them which is a pilot project and proposed to be used widely in
are: the coming years. There are many advantages in adaption
of the technology but it also has its own limitations, which
Regulatory Compliance is required to be redressed for making the Blockchain a
Regulatory guidelines for blockchain is very complex and preferred choice across the industry.
constantly evolving because technology keeps on evolving
as well. This requires banks to regularly scrutinize legal and Note: Views and opinion expressed in the article are of
compliance framework for processes like KYC and AML author's and not of the Bank.
regulations. In India, there is currently no legislative
structure to keep a check on blockchain technology and its Sources:

numerous applications. However, there are few sector https://www.knowledgehut.com/
specific laws made to keep an eye on use of Blockchain. https://1finance.co.in/
https://bfsi.economictimes.indiatimes.com/
Data Privacy https://www.researchgate.net/
Although blockchain offers transparency and immutability,
https://appinventiv.com/
there has always been an issue of data privacy. Phishing
https://blockchain.gov.in/
scams, private key attacks, hacking & identity thefts are the
https://www.grantthornton.in/
common concerns of using blockchain in the banking sector.
To combat these issues, banks must prioritize data https://confirm.ie/
encryption, access control and other security measures to https://www.npci.org.in/
protect sensitive banking information. Other Banking magazines & journals

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