The Agricultural Bank of China (ABC), the fourth largest bank in the world (by total asset) and one of the “Big Four” state-owned banks in China, has successfully issued a $300,000 loan using a blockchain platform.
As reported by a local financial news source, the bank tested the new technology for the first time in one of its branches in the Guizhou province. The ABC managed to issue a loan backed by a piece of land as collateral.
According to the ABC, the blockchain system is developed to work with various other commercial banks and institutions such as the People’s Bank of China as well as the Land and Resources Bureau.
Why turn to blockchain?
Some of the main goals for turning to blockchain technology, the bank says, is to ensure transparency regarding data of borrowers as well as their collateral, and to streamline the usually time-consuming process of approving loans.
By using blockchain tech, the bank has also eliminated the double spending problem, where borrowers could allegedly use the same piece of land as collateral to apply for loans from other banks.
The ABC aims to provide wider access to land-backed loans
With this project, the ABC displays clear efforts to make loans a lot more accessible for farmers and businesses from rural China. After the successful testing results, the ABC wants to expand the blockchain application to issuing loans that are backed up by other types of assets.
The most important aspect is the fact that The Agricultural Bank of China now joins the ranks of the 12 banks in the country that are currently working with blockchain technology. There are also reports of ABC developing a decentralized network to issue unsecured loans in smaller amounts.