The Securities Exchange Board of India issues Circular on “Security and Covenant Monitoring using Distributed Ledger Technology” vide press release dated August 25, 2021. A platform for ‘Security and Covenant Monitoring System’ (‘system’) hosted by Depositories is being developed.
The system using Distributed Ledger Technology (DLT) shall be used for recording of the process of creation and monitoring of security (viz. due diligence, charge creation etc.), continuous monitoring of covenants by Debenture Trustees (as applicable), credit rating of the non-convertible securities by the Credit Rating Agencies, etc.
This system will be a quasi-registry of charges on full implementation and will achieve the objective viz. “what is the value of security that a charge holder has and who all does it shares with”. The system shall be implemented by April 01, 2022.
