India Deploys Tokenized Bond Pilot Program

India has launched a tokenized bond pilot program, issuing $107 million in tokens. The Securities and Exchange Board of India (SEBI) said Demat 2.0 allows corporate bonds to be issued and held as digital tokens on a distributed ledger owned by the country's statutory depositories.

The system connects to the Reserve Bank of India's (RBI) wholesale central bank digital currency (CBDC) through its Unified Market Interface. The first issuances came from public-sector lender REC, which raised 5 billion rupees ($67 million) from 18 investors on Monday, and engineering conglomerate Larsen & Toubro (L&T), which raised another 5 billion rupees from four investors on Wednesday.

The pilot program is the result of an expanded plan that initially called for a single REC issuance. SEBI said that issuers can receive funds on the day of bidding instead of two to three days later, and that atomic settlement removes the delay between the movement of money and bonds. Smart contracts can automate interest and redemption payments.