India's RBI Approves Blockchain MSME Financing Platform to Boost Credit Access

India’s Reserve Bank (RBI) has granted approval for the Indian Banks’ Digital Infrastructure Company (IBDIC) Pvt Ltd to launch a blockchain-based platform designed to streamline financing for micro, small, and medium enterprises (MSMEs) [1]. The platform represents the first successful exit from the RBI’s Fifth Cohort of the Regulatory Sandbox, a framework aimed at supporting fintech innovation through controlled experimentation [2]. The system tokenizes invoices from large corporations in supply chains, enabling faster and more secure access to credit for lower-tier MSME suppliers [3].

The platform operates on a permissioned blockchain model, where only verified participants—such as anchor corporations, MSMEs, and banks—can transact, ensuring a balance between transparency and data privacy [4]. When suppliers present approved invoices, these are converted into digital tokens that MSMEs can use as collateral for immediate working capital. Lenders benefit from a shared ledger that reduces credit risk and eliminates invoice duplication [5].

Major banks, including ICICI Bank, HDFC Bank, Yes Bank, and Aditya Birla Capital, have partnered with IBDIC to facilitate lending against the tokenized invoice values. Their involvement not only validates the system’s reliability but also accelerates its adoption by creating a network effect that lowers barriers for smaller lenders and businesses [6]. The RBI’s endorsement confirms the platform’s compliance with regulatory standards following rigorous testing under its sandbox framework [7].

This approval comes after IBDIC was the sole successful candidate in the supply chain finance category among five selected from 22 applications in the Fifth Cohort. The move signals a growing regulatory confidence in the application of blockchain for enterprise finance in India and could serve as a model for future fintech innovation [8].

The RBI’s regulatory approach has also evolved, with the sandbox transitioning to an “On-Tap” model in April 2025, allowing fintechs to apply for testing at any time. This shift is expected to speed up innovation by reducing wait times and enabling quicker adaptation to new technologies [9].

The IBDIC platform addresses a critical issue in India’s financial ecosystem: the MSME sector, which contributes over 30 percent of GDP, has long faced a funding gap of more than Rs 20-25 lakh crore. By leveraging blockchain technology, the platform reduces friction in the credit process and enables faster capital access for MSMEs, gradually embedding blockchain into India’s digital financial infrastructure [10]. The success of this initiative also supports India’s broader digital economy strategy, where technologies like Aadhaar and UPI have laid the groundwork for a modular, interconnected financial ecosystem.

The approval of the IBDIC platform underscores the RBI’s openness to regulated blockchain applications and tokenized assets in financial systems. It may pave the way for similar solutions in areas such as trade finance, government procurement, and agricultural supply chains, where transparency and efficiency are paramount [1].

Sources:

[1] title: India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance

url: https://coinedition.com/indias-central-bank-endorses-enterprise-blockchain-use-in-supply-chain-finance/

[2] title: India's First RBI Sandbox Exit: IBDIC's Blockchain Platform

url: https://www.tice.news/tice-crypto/ibdic-exits-rbi-sandbox-with-blockchain-based-msme-financing-platform-9664596

[3] title: RBI Approves Blockchain-Based MSME Financing to Boost Credit Access, Transparency

url: https://www.ainvest.com/news/rbi-approves-blockchain-based-msme-financing-boost-credit-access-transparency-2508/

[4] title: RBI Approves Blockchain MSME Financing Platform; Banks Set for Adoption

url: https://intellectia.ai/news/crypto/rbi-approves-blockchain-msme-financing-platform-banks-set-for-adoption

[5] title: RBI Gives Thumbs Up to Blockchain-Based MSME Financing, Making Credit Faster & Cheaper for Small Biz

url: https://www.instagram.com/p/DNaUapgNdig/

[6] title: India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance

[7] title: India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance

[8] title: India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance

[9] title: India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance

[10] title: RBI Approves Blockchain-Based MSME Financing to Boost Credit Access, Transparency