Financing for small and micro sized enterprises (SMEs) has been one of the major blockchain use cases for banks and financial services companies in China.
The Bank of China has completed the issuance and pricing of the first 20 billion yuan of SME loans for 2019 in China. The bank used its own blockchain system to issue digital certificates that prove ownership, form groups of underwriters and document proof of transactions.
The bond is a two-year fixed interest rate product that has 3.25% coupon rate. The funds raised this time are specifically used to issue loans to small and micro enterprises to support the development of the real economy.
Since January 2019, Bank of China has achieved rapid development of inclusive financial business. As of the end of September, the Bank has lent SME loan amount of CNY 404 billion, an increase of 35.36% over the end of last year, to more than 410,000 SMEs.
The industry believes that the use of blockchain technology to issue bonds can reduce the risk of information asymmetry in the bond issuance process. This help financial institutions in reducing the cost of bond issuance and improving the efficiency, and also help in facilitating subsequent auditing and management.