India’s central bank, the Reserve Bank of India (RBI), has cleared a blockchain-based MSME financing solution developed by Indian Banks’ Digital Infrastructure Company (IBDIC) Pvt Ltd for broader adoption.
The approval comes after successful completion of testing under the Fifth Cohort of RBI’s Regulatory Sandbox (RS), which featured a theme-neutral approach to fintech innovation.
RBI confirmed the product’s viability in a press release today, August 15, 2025. It says the solution had met predefined testing benchmarks. It is now eligible for adoption by entities such as banks and NBFCs pending compliance with applicable regulations.
Blockchain Solution for MSME Credit Access
The IBDIC solution seeks to improve access to affordable finance for lower-tier MSMEs within corporate supply chains. It uses blockchain and smart contracts to tokenize invoices accepted by large enterprises that form the backbone of these supply chains.
The tokenized invoices act as digital proof of value addition by suppliers. They allow lenders to finance these MSMEs against the tokens via a digital platform. Payments flow as tokens from buyers to sellers, effectively digitizing and accelerating the working capital cycle.
Notably, IBDIC partnered with leading Indian financial institutions, including ICICI Bank, HDFC Bank, Yes Bank, and Aditya Birla Capital.
Only One Blockchain Solution Clears Testing in Fifth Sandbox Cohort
The Fifth RS Cohort began in August 2024 after being announced in late 2023. Of the 22 applications, only five were selected for testing. Two of them, IBDIC and Finagg Technologies, offered similar vendor financing models. RBI’s announcement confirms that only IBDIC’s product successfully passed the sandbox, which validates its structure and compliance readiness.
Sandbox Goes “On-Tap” for New Innovations
As per an earlier update from April 2025, the RBI has now moved to an “On-Tap” model for its sandbox. It means fintechs and crypto firms can apply anytime without waiting for themed cohorts.
It stated applications must be submitted via the PRAVAAH portal and will be assessed under the updated Enabling Framework for Regulatory Sandbox (Feb 2024).
Overall, the clearance from the RBI marks a major regulatory step for blockchain in India’s financial sector. Regulators are showing comfort with permissioned blockchains and tokenized assets for enterprise use. IBDIC’s success could pave the way for tokenization-as-a-service, DeFi tools for SMEs, and more blockchain pilots from Indian banks.
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