The bank made the first transaction on the basis of a blockchain according to the law of Sharia

In the middle of January, 2021 Bangladesh bank City Bank together with the International Islamic trade finance corporation (ITFC) carried out the transaction with the letter of credit on Contour blockchain. Transaction is performed according to laws of Sharia (Islamic banking (the industry of participation financing)).

Cross-border a blockchain transaction with the letter of credit it was carried out with the assistance of division of ITFC which specializes in financing of trade operations according to agreements of a murabakh. The letter of credit was issued on behalf of the Bangladesh producer of Debonair Group clothes of the Apparel Link trading company registered in Hong Kong.

City Bank carried out the first transaction on the basis of a blockchain according to the law of Sharia

Usually issue of the cross-border letter of credit takes from 24 to 72 hours, however thanks to Contour technology which is based on R3 Corda blockchain, all process took 38 minutes. In addition to reduction of time of processing of transactions the blockchain also excludes risk of counterfeit and fraud due to increase in transparency of functions of data exchange.

City Bank is the leading bank in Bangladesh and aims to use technologies for ensuring effective work for our clients. It will lay a way to development of digital trade by means of blockchain technology. I would like to thank all parties which were a part of this innovative transaction — the head of department of wholesale bank service sheikh Mohammad Maruf noted.

The CEO of Contour Karl Vegner said that process of digitalization of the industry of trade financing gradually accelerates. Blockchain technology open new opportunities for effective providing letters of credit. Formation of the whole ecosystem of banking institutions, corporations and suppliers of technologies which is available to all concerned parties is observed. The consortium Contour which was earlier called Voltron was registered at the beginning of 2020 by seven banks, including Standard Chartered and BNP Paribas. Soon Citi Bank and some other large banks, such as Standard Bank joined them.^[1]

Notes