Taiyuan City Rural Credit Union recently launched an electronic letter of guarantee platform, the first of its kind in North China's Shanxi province, according to local officials.
An e-guarantee is a bank guarantee issued in electronic form such as a PDF file with a qualified electronic signature of the bank's authorised representatives.
Officials said the operational mode of an electronic letter of guarantee is that the bidder submits an application for a guarantee to the financial institution.
The financial institution then issues an electronic guarantee voucher so that the financial institution can provide financial security for both parties.
"Compared with traditional paper guarantees, electronic guarantees require no mortgage, no counter-guarantees, and freezing funds," said Xue Baolong, chairman of Taiyuan City Rural Credit Union.
"They are simple and convenient to handle and easy to check for authenticity, which can play an important role in transaction supervision," Xue added.
With technical support from Shanxi Jinchan E-commerce Co, the e-guarantee platform uses artificial intelligence and blockchain technology.
People can implement online applications, reviews, and verification of authenticity and encrypt a guarantee electronically -- without manual intervention throughout the whole process -- and receive an e-guarantee in three hours on the platform.
The platform will effectively reduce the capital costs of enterprises and contribute to ensure epidemic prevention and control as well as socioeconomic development, according to Xue.