India's Demat 2.0 Pilot Issues $116M in Tokenized Corporate Bonds
India's Securities and Exchange Board (SEBI) and Reserve Bank of India (RBI) have launched a pilot infrastructure for issuing, holding, trading, and settling corporate bonds as digital tokens.
The system, called Demat 2.0, is being integrated directly into the nation's existing regulated securities market, unlike many tokenization experiments built on standalone blockchain platforms.
According to SEBI, three companies have already issued tokenized bonds worth a total of ₹1,025 crore (approximately $116 million). REC Limited led the charge, becoming the first issuer on September 7, raising ₹500 crore from 18 investors. Larsen & Toubro followed suit with the same amount from four investors, while IIFL raised ₹25 crore from a single investor on September 9.
The pilot infrastructure allows corporate bonds to be created natively on a distributed ledger maintained by market infrastructure institutions, with ownership records held by the country's statutory depositories. This connection to the RBI's wholesale digital rupee through its Unified Market Interface enables the securities and cash legs of a transaction to settle at the same time.
The atomic delivery-versus-payment model eliminates the period previously needed when one party has transferred an asset while still waiting for the other side to complete the payment. Issuers can receive funds on the same day as bidding, compared with the traditional two-to-three-day process. Secondary-market investors could get their proceeds immediately as well.
Smart contracts can also automate coupon and redemption payments directly into investors' CBDC wallets. Separately, investors can use their existing demat accounts rather than create an entirely different blockchain wallet infrastructure.
The rollout of Demat 2.0 is expected to come in three stages. The current phase focuses on institutional corporate bond issuance. The second stage will introduce secondary-market trading and expand access to retail investors, while the last one could bring additional regulated entities onto the network and explore tokenization of other financial instruments.