After 'globally feted' blockchain platform for bonds, NSDL launches similar product for loans

The NSDL's CEO told Moneycontrol that the depository will not verify information pertaining to loans but will enable entities such as banks and credit rating agencies to enter relevant information on the platform.

The National Securities Depositories Limited (NSDL) has launched a blockchain-based platform for monitoring loans and is waiting for banks to enroll for the service, Padmaja Chunduru, chief executive officer of NSDL, told Moneycontrol.

The service will help banks ensure that the assets that have been pledged to avail a loan have not been pledged multiple times.

"This platform will come in very handy because the resources spent by banks on constant loan monitoring will come down," said Chunduru.

NSDL has already made presentations to the Indian Banking Association (IBA) and banks including HDFC Bank regarding the new platform and is awaiting onboarding from them, said Chunduru.

Chunduru spoke with Moneycontrol on the sidelines of 17th Annual Corporate Governance Summit event held in Mumbai on April 2.

NSDL had a similar product launched for bonds two years back and that has been appreciated globally. The depository had launched a blockchain-based security and covenant monitoring platform for enhancing the monitoring of bonds. This was said to provide an immutable and verifiable audit trail of transactions between debenture trustees and issuers.

At the CII event, SEBI Chairperson Madhabi Puri Buch also had high praise for NSDL's bond platform. She said, "We have the most sophisticated ledger technology for bond markets today for which the NSDL is feted across the globe. And today we are at the centre stage and people turn to us to ask for guidance and advise."

Chunduru told Moneycontrol that the depository will not verify information pertaining to loans but will enable entities such as banks and credit rating agencies to enter relevant information on the platform.

The key advantage of the platform is that transactions made on blockchain once entered cannot be deleted and hence borrowers cannot pledge the same assets multiple times.

"You can't erase any transactions- after it is done on a blockchain, you can only modify it. This is a big comfort for any bank or any lender because the same assets are being pledged multiple times," said Chunduru.