The Securities and Exchange Board of India vide its notification dated 18th April 2022, has issued operational guidelines for security and covenant monitoring using Distributed Ledger Technology (DLT). Accordingly, with effect from April 01, 2022, the recording of asset details, allotment, listing and payment of interest or redemption shall be available in the DLT system.
In order to ensure the uniqueness of the assets of the issuer offered as security, appropriate validation/ duplicate checks based on parameters identified for each asset type have been put in place in the system. Also, debenture trustees, on a yearly basis, shall reconcile and eliminate duplicate entries for an asset in the system.
For data exchange and verification across depositories, the format for unique Asset ID assigned to an asset has also been standardised to a 12-digit alphanumeric string.
Notably, the system is applicable to all the issuers proposing to issue non-convertible securities on or after April 01, 2022, and they shall record the details in the system before activation of ISIN. Depositories shall allot or unfreeze an existing ISIN (in case of re-issuance), as applicable only after confirming recording of above-mentioned information by issuers.
However, Sebi has also given a relaxation till 1st July 2022, to issuers who are unable to record details in the system after explaining Depositories, post which ISIN shall not be allotted to an issuer for non-compliance. Further, for existing outstanding non-convertible securities, issuers shall enter the details into the DLT system on or before 30th September, 2022.
