Top corporates and banks in India are reportedly testing out the use of cryptocurrency to pay vendors and move money between subsidiaries, said the The Economic Times.
Unnamed sources told the publication that Hindustan Unilever, Reliance Industries, HDFC Bank and ABG Shipyard are among the conglomerates experimenting with cryptocurrency for intra-company transactions with subsidiaries, as well as external vendor payments, in an effort to optimize treasury transactions. The Economic Times spoke with some of the executives directly involved in the tests, though Reliance Industries, HDFC and ABG declined to comment publicly on the news.
Hindustan Unilever said it is focusing on digitization, but did not comment specifically on the use of cryptocurrency.
“The cryptocurrency would only be used by the companies and banks internally,” one source told the publication. “It will mainly be effective as a working capital management tool, where rather than actually transferring money, cryptocurrency will be transferred and accounts shall be reconciled at a later date.”
Experts told the publication that payments between subsidiaries of a single corporation are often high-volume and, thus, introduce friction and inefficiencies for corporate treasury departments.
KPMG India‘s Partner and Head of CFO Advisory Sai Venkateshwaran told reporters that businesses are beginning to explore the use of blockchain in the country.
“Several large companies are evaluating various use cases of blockchain, including in areas such as managing intra-group transactions and as a logical extension, looking at its use as a group treasury management tool for more efficient cash and working capital management,” Venkateshwaran said. “Apart from greater efficiency and accuracy, it has the potential to bring enhanced levels of transparency for group treasury management and also cost savings.”
It’s unclear whether corporates are considering the deployment of blockchain, cryptocurrency or both, however.