Global financial giant JPMorgan has announced a strategic partnership with six major Indian banks to launch a blockchain-based platform to settle interbank dollar transactions.

This latest move is part of a broader effort to promote the growth of Gujarat International Finance Tec-City (GIFT City), a project by the Indian government to establish a competitive financial hub to rival global centers such as Singapore, Hong Kong, Abu Dhabi Global Market (ADGM), and Dubai’s International Financial Centre.

Kaustubh Kulkarni, the senior country officer for India and vice chairman of Asia Pacific at JPMorgan, stated in an interview that the pilot project would commence in the coming months, during which the banks’ experiences will be analyzed.

The consortium of banks participating in this initiative includes esteemed private lenders in India such as HDFC, ICICI, Axis, Yes, IndusInd, and JPMorgan’s banking unit located within GIFT City.

The primary objective of JPMorgan’s partnership with these Indian banks is to leverage blockchain technology to expedite and streamline interbank dollar transactions.

Currently, settlements using traditional systems can take several hours to complete. However, by implementing blockchain technology, these transactions could be executed almost instantaneously, significantly enhancing the speed and efficiency of financial operations.

JPMorgan’s Onyx blockchain to enable instant settlements

JPMorgan intends to harness the power of blockchain to facilitate 24×7 transaction processing, helping GIFT City banks to support their time zones and operating hours. This would significantly enhance their capabilities and competitiveness in the global financial landscape, offering seamless and instantaneous transaction settlements.

Scheduled to launch on June 5, the pilot project will utilize JPMorgan’s blockchain platform called Onyx, subject to approval from the International Financial Services Center Authority.

Onyx, developed by JPMorgan in 2020, is a blockchain-based platform designed explicitly for wholesale payment transactions. As of April 2023, the bank has reportedly processed nearly $700 billion in short-term loan transactions through Onyx.

JPMorgan is not the only major bank to establish a presence in GIFT City; several other global systemic banks, including Deutsche Bank and MUFG, have also recognized the immense potential and opportunities the burgeoning financial center offers.