India’s securities regulator SEBI and the Reserve Bank of India have launched “Demat 2.0,” a pilot to issue and settle corporate bonds as digital tokens on a permissioned ledger operated by depositories NSDL and CDSL, targeting the $620 billion market.
Three issuers—REC, Larsen & Toubro, and IIFL Finance—have raised a combined 1,025 crore rupees (~$107 million); the system links to the RBI’s wholesale digital rupee for atomic settlement, with smart contracts automating interest and redemptions.
The bonds retain their legal terms, ratings, and investor protections, with secondary trading and retail access planned for later phases.
India has launched a pilot program to issue and settle corporate bonds as blockchain tokens, marking an early effort to bring distributed-ledger technology into a $620 billion market through the country’s digital rupee.
The Securities and Exchange Board of India introduced the initiative, branded “Demat 2.0,” last week alongside the Reserve Bank of India, with SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra unveiling it at the Global Fintech Fest.
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Under the framework, a corporate bond is issued as a native digital token on a private, permissioned ledger managed by India’s statutory depositories, NSDL and CDSL.
Three companies have already utilized the framework, raising a combined 1,025 crore rupees, or roughly $107 million. State-owned lender REC led the way on September 7, raising 500 crore rupees from 18 investors in what it described as India’s first tokenized corporate bond, followed by Larsen & Toubro with another 500 crore rupees and non-bank lender IIFL Finance with 25 crore rupees.
The system links the token ledger to the RBI’s wholesale digital rupee via a Unified Market Interface, enabling atomic settlement in which the bond and payment transfer simultaneously.
This allows issuers to receive proceeds on the bidding day rather than days later, while smart contracts automate interest payments and redemptions.
SEBI emphasized that the bonds remain legally unchanged, retaining their credit ratings, debenture trustees, listing rules, and investor protections, and stated that the market would not be fragmented. Investors can hold the tokens in existing Demat accounts without fresh know-your-customer checks. Later phases will introduce secondary trading and eventually retail access.
India has generally maintained a cautious stance toward private cryptocurrencies while embracing blockchain on its own terms, through the rollout of the RBI-backed digital rupee and a lawmaker’s earlier push to use tokenization to widen investment access for the middle class.
