RBI approves blockchain-based MSME financing platform to boost credit access and transparency

The Reserve Bank of India (RBI) has authorized a blockchain-based financing platform designed to enhance access to credit for micro, small, and medium enterprises (MSMEs), a critical segment of India’s economy. The platform, developed by the Indian Banks’ Digital Infrastructure Company (IBDIC) Pvt Ltd, was cleared for adoption following its successful evaluation in the Fifth Regulatory Sandbox Cohort. This initiative marks a pivotal advancement in India’s digital finance ecosystem, aiming to streamline the traditionally slow and paper-heavy credit approval process [1].

The platform leverages blockchain technology and smart contracts to tokenize invoices that have been validated by larger enterprises. These tokens serve as verifiable digital proof of a supplier’s contribution, enabling financial institutions to offer direct financing to MSMEs through a secure and transparent digital platform. The tokenized system allows for the digital management of payment flows, enabling faster transfers between buyers and suppliers, and accelerating working capital cycles [2].

Key participants in the trial phase include ICICI Bank, HDFC Bank, Yes Bank, and Aditya Birla Capital—some of the country’s most prominent financial institutions. Their involvement signals the platform’s readiness for broader implementation and underscores the banking sector’s increasing confidence in blockchain-based financial solutions [3].

The platform was one of five products tested under the Fifth Regulatory Sandbox Cohort, which began in August 2024. Among these, IBDIC’s solution was the only one to pass the evaluation phase, earning regulatory approval. This outcome highlights the RBI’s endorsement of permissioned blockchain technology and positions IBDIC as the first authorized blockchain-based MSME financing platform in India [4].

In April 2025, the RBI introduced an on-tap sandbox framework, allowing fintech firms to submit applications for regulatory testing at any time. This shift reflects a more flexible and responsive approach to financial innovation. The new system operates via the PRAVAAH portal, with the updated Enabling Framework for the Regulatory Sandbox being released in February 2024 [5].

The approval of IBDIC’s platform is a strategic move to address long-standing inefficiencies in MSME financing, where small businesses often face high borrowing costs and prolonged processing times. By reducing fraud risk, cutting transaction costs, and increasing transparency, the platform is expected to enhance financial inclusion and provide underserved suppliers with better access to affordable credit [6].

While the system is not intended to replace traditional financing methods, it offers a complementary solution that is faster, more secure, and more transparent. It provides MSMEs with greater flexibility in managing their working capital and planning for future growth. The platform could also serve as a model for future digital finance initiatives, demonstrating how emerging technologies can be applied to real-world economic challenges [7].

The timing of this initiative aligns with broader efforts to modernize India’s financial infrastructure and promote technological innovation. The RBI has been actively encouraging the adoption of technologies such as artificial intelligence and data-driven risk assessment tools, and the approval of the IBDIC platform reinforces this commitment. It signals a forward-looking regulatory environment that supports economic development through digital transformation [8].

The success of the platform will largely depend on the speed of adoption by financial institutions and the ability of MSMEs to effectively utilize the new system. If implemented successfully, it has the potential to empower thousands of small businesses and contribute to broader economic growth across the country.

Source: [1] India's Central Bank Endorses Enterprise Blockchain Use in Supply Chain Finance (https://coinedition.com/indias-central-bank-endorses-enterprise-blockchain-use-in-supply-chain-finance/)

[2] Revolutionary Blockchain-Based MSME Financing (https://bitcoinworld.co.in/blockchain-based-msme-financing/)

[3] Blockchain News (https://coinedition.com/tag/blockchain-news/)

[4] Growth Equity Investment News (https://www.summitpartners.com/news)

[5] RBI Approves Blockchain-Based MSME Financing to Boost Credit Access, Transparency (https://www.ainvest.com/news/rbi-approves-blockchain-based-msme-financing-boost-credit-access-transparency-2508/)

[6] Indian Banks : Latest News Headlines, Videos and (https://www.business-standard.com/topic/indian-banks)