The Indian Union Cabinet today gave its ex-post facto approval for conducting joint research on distributed ledger and blockchain technology with BRICS nations. The cabinet was chaired by Prime Minister Narendra Modi in New Delhi.

The Memorandum of Understanding (MoU) on “Collaborative Research on Distributed Ledger and Blockchain Technology” between the EXIM Bank of India and member banks of other BRICS nations aims at boosting developments in digital economy.

Other signatory banks under the BRICS Interbank Corporation Mechanism include Banco Nacional de DesenvolvimentoEconomico e Social, China Development Bank, State Corporation Bank for Development and Foreign Economic Affairs and Development Bank of Southern Africa.

“Distributed ledger or blockchain technology holds potential for solutions to various challenges being faced in the financial sector space of the BRICS nations,” the cabinet said in a statement today. “The MoU intends to enhance understanding of distributed ledger or blockchain technology, through the joint research efforts to identify areas within respective business operations where it may have the potential for applications aimed at enhancing the operational efficiencies.”

The MoU came into effect after the Xiamen Declaration signed by BRICS leaders in China last year had highlighted the importance of the digital economy. The Declaration also pointed out how the BRICS nations could leverage digital economy to foster global economic development.

Earlier this year, Indian finance minister Arun Jaitley had indicated that the government was open to exploring the application of blockchain technology though he also ruled out any place for cryptocurrencies in the country’s economy.

“The government will take all measures to eliminate the use of crypto-assets in financing illegitimate activities. The Government will also explore the use of blockchain technology for ushering in digital economy,” Jaitley said while presenting the Union Budget on 1 February.

An IBS Intelligence report on Blockchain Technology in Financial Services states that Asia-Pacific is expected to drive market growth as economies such as China and India intend to digitise their economies.

by Parnika Sokhi