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India’s NSDL Launches a Blockchain-based Security Monitoring Platform for Bonds

The National Securities Depository Ltd (NSDL) unveiled a blockchain-based or Distributed Ledger Technology (DLT) security and covenant monitoring platform on Saturday (May 7).

The NSDL and SEBI DLT platforms will make monitoring security and governance in the corporate bond market easier. It will further increase market discipline and transparency.

Union Finance Minister Nirmala Sitharaman was present at the event when the SEBI Chairperson Madhabi Puri Buch launched the platform.

What did the FM and SEBI Chairperson say?

“Today, we have noticed that people are increasingly placing their trust in distributed ledger technology regarding the market, securities, investment, and payments,” Buch stated.

According to her, transparency and real-time nature are two essential qualities of DLT driving their popularity.

Buch said that transparency and the technology’s real-time nature allow individuals to see all the data stored on the blockchain platform. She adds that the technology also permits unlimited divisibility. This divisibility facilitates breaking down digital assets, currency, or other information into smaller bits, thus facilitating financial inclusion.

However, the SEBI chairperson voiced skepticism about the technology’s cost-effectiveness. While many people refer to DLT as cost-effective, she claims that the technology is not cost-effective in its current form.

“If cost-effectiveness is achieved, it will be yet another appealing feature of the DLT technology,” she noted.

On the other hand, Buch expressed concern about the technology’s anonymity. One important difference between the private DLT expressions and what we usually describe as Central Bank Digital Currencies is the implementation of anonymity. This anonymity is not expected to be employed because we do not want this part of the technology to be utilized in financial transactions.

Likewise, the Finance Minister had also expressed concerns about the anonymity clause of the blockchain technology.

The NSDL is a Mumbai-based Indian central securities depository founded in August 1996. It is India’s first nationalized electronic securities depository.

NSDL claims to have developed a solid framework for blockchain technology to revolutionize the corporate bond market through more digitalization with the launch of DLT.

India’s Blockchain Market is Growing

India will have more than 350 blockchain firms by 2022. Blockchain might contribute $62.2 billion to the Indian economy by 2030.

In 2021, blockchain firms in the country raised $247 million in venture capital money. In this year’s Budget, the government also revealed plans to develop a fiat cryptocurrency.

The blockchain sector in the country has sparked a lot of interest, and several deals have lately been announced. Creduce Technologies, a ClimateTech business, recently announced the creation of KICHEE, a blockchain token focused on sustainability. The coin is expected to go live on May 31, with a pre-launch sale starting on May 10.

In February of this year, Nischal Shetty, the creator and CEO of Binance-owned crypto exchange WazirX, and Omar Syed, a US-based blockchain architect, founded Shardeum, a new Layer-1 blockchain.

Shriram Transport Finance Company Limited, India’s largest asset finance company, will use Print2Block’s Platform, which is audited publicly on Polygon, to offer Digital Fixed Deposit Certificates. It is the first NBFC in India to use Blockchain to issue deposit certificates.