City Bank executes cross-border Shariah blockchain LC

City Bank on Wednesday said to have executed a cross-border letter of credit (LC) transaction under a Shariah-based financing arrangement using blockchain technology, claiming it was the first Bangladeshi bank to do so.

International Islamic Trade Finance Corporation, the trade solutions arm of Islamic Development Bank, was City Bank's adviser and financer for the LC under a Murabaha Trade Finance.

The LC was issued on behalf of Debonair Group, a leading Bangladeshi garment exporter, for the import of accessories from Hong Kong-based Apparel Link, the bank said in a statement.

Processing time for this transaction, from LC draft initiation to issuance and advising, took only 38 minutes compared to the typical 24 to 72 hours required for cross-border LCs.

Blockchain technology allows parties to manage their own data while transacting and viewing shared information seamlessly and securely with their trading partners and service providers.

"This transaction will pave the way for improved digital trade through blockchain technology," said Sheikh Mohammad Maroof, City Bank's additional managing director.

"With this system, all parties involved will be using one platform where all can track progress and get notified when required, to take the next actions in the process, hence more transparency and trust," said Abou Jallow, operations general manager at the corporation.