The Securities and Exchange Board of India (SEBI) is developing a security and covenant monitoring platform using distributed ledger technology (DLT), according to a 13 August circular by the market regulator.
The system, to be implemented from 1 April 2022, is intended to strengthen the process of security creation and monitoring of securities created, asset cover and covenants of non-convertible securities.
The system will be a quasi-registry of charges on full implementation and will show the value of a security held by a charge holder, and who it is shared with.
DLT, the same technology used in blockchains, will be used for recording the process of creation and monitoring of securities (due diligence and charge creation), monitoring of covenants by debenture trustees, credit ratings of non-convertible securities, etc.
The Business Law Digest is researched and written by Mithun Varkey.