The Agricultural Bank of China (ABC), one of the world’s largest banks by total asset, has completed the issuance of a loan worth of $300,000 using a blockchain system.
The bank tested the technology for the first time in one of its branches in China’s Guizhou province which issued a loan that is backed by a piece of agricultural land as collateral, a local financial news source reported on Tuesday.
The ABC said the blockchain system is deployed among various nodes to facilitate the loan issuance including other banks, the provincial branch of the People’s Bank of China as well as the local government’s Land and Resources Bureau.
By having a distributed ledger to keep parties updated with the data of borrowers and their collateral, the bank said the tamper-proof blockchain can streamline the manual process of approving loans and eliminate the problem of double spending – borrowers using the same piece of agricultural land as collateral to apply for loans from different banks.
The blockchain application is part of the bank’s effort to bring wider access to loans for farmers and businesses who own agricultural land in rural China.
Following the initial testing result, the ABC aims to further expand the application to issuing loans that are backed by other types of assets such as real estate properties in the future.
Listed in both mainland China and Hong Kong with a total asset of $3 trillion as of December 2017, the ABC is one of the “Big Four” state-owned commercial banks in China and also the fourth largest bank in the world by total asset.
Currently, out of the 26 publicly-listed banks from China, 12 of them have already started working on blockchain technology.
The ABC’s annual filing disclosed early this year shows the state-owned entity has also developed a decentralized network to issue unsecured loans in smaller amount via an automated process for agricultural e-commerce merchants.
ABC image via Shutterstock