India has moved $107 million (10.25 billion rupees) of corporate debt onto a new tokenization platform, with three issuers completing landmark transactions under a joint initiative by the country’s securities regulator and central bank that pairs distributed-ledger securities with wholesale central bank digital currency.
The pilot, branded Demat 2.0, is being conducted by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). Details of the program were disclosed by SEBI on Thursday.
REC, a state-owned financial institution, was the first issuer to participate, raising 5 billion rupees from 18 investors in a transaction completed on Monday. Two further deals followed on Wednesday: engineering conglomerate Larsen & Toubro raised 5 billion rupees from four investors, and non-bank financial company IIFL sold 250 million rupees of bonds to a single investor.
Three-Issuer Debut Exceeds Initial REC Plans
The scope of the first phase surpasses figures reported in August, when Reuters indicated the trial would involve selected investors and an REC offering valued at less than 5 billion rupees. With the addition of L&T and IIFL, the total issuance is more than double the amount originally envisioned for REC alone.
SEBI has confirmed that additional primary issuances are underway as part of this initial stage. Future phases are expected to integrate the tokenized securities into existing request-for-quotation platforms for secondary trading, with retail participation potentially on the horizon. SEBI stated that insights gained from the pilot will guide decisions on broader deployment of the framework.
A notable feature of the program is that investors are not required to open a new securities account or undergo a separate Know-Your-Customer process. Tokenized bonds can be held within an existing Demat account. However, participation in the pilot requires Demat 2.0 activation with the relevant depository, and settlement on the cash side requires a wholesale CBDC wallet held at a participating bank.
Distributed Ledger Connects Bond Ownership With RBI Digital Currency
Demat 2.0 redefines how securities are represented and settled. Corporate bonds are issued as digital tokens on a distributed ledger managed by India’s statutory depositories. The payment leg is linked to the RBI’s wholesale CBDC via the central bank’s Unified Market Interface.
This architecture enables atomic settlement, eliminating the delay between money and securities transfers, according to SEBI. It also accelerates funding timelines for issuers, with proceeds available on the bidding day rather than two to three days later. Additionally, smart contracts can streamline interest payments and bond redemptions.
The regulator confirmed that tokenization does not alter the legal status, repayment obligations, or investor protections associated with the bonds.
SEBI stated that the arrangement establishes India as the first country where corporate bonds are natively created on a distributed ledger, statutory depositories maintain ownership records, and CBDCs facilitate settlement — all within existing regulated market infrastructure.
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