India Launches Blockchain-Based Bond Pilot Linked to RBI's Wholesale CBDC

India has taken a significant step towards blockchain-based settlement in its capital markets. The Securities and Exchange Board of India (SEBI) has launched a pilot called 'Demat 2.0' that enables corporate bonds to be issued and held as tokenized assets, with settlement linked to the Reserve Bank of India's (RBI) wholesale central bank digital currency (CBDC).

The pilot allows companies like REC, Larsen & Toubro (L&T), and IIFL to issue tokenized bonds, which can be held in existing Demat accounts without requiring a separate account or new KYC processes. The settlement is tied to the RBI's wholesale CBDC via the Unified Market Interface (UMI), reducing timing mismatches between cash and bonds.

The first issuers collectively raised over 10 billion rupees ($107 million) across multiple transactions, with REC raising 5 billion rupees from 18 investors on Monday. SEBI claims that issuers can receive funds on the day of bidding instead of the typical two- to three-day delay, thanks to 'atomic settlement'.

SEBI emphasizes that tokenization does not alter the legal status of the bonds or investor protections, and that the pilot aims to streamline both settlement timing and payment operations. The regulator also pointed out that smart contracts can automate key cash-flow events associated with the bonds, including interest and redemption payments.