Key points

  • SEBI and RBI launched Demat 2.0 as a regulated pilot for issuing and settling tokenized corporate bonds.
  • REC, Larsen & Toubro and IIFL Finance have issued a combined ₹1,025 crore through the pilot.
  • The first phase is limited to institutional investors, with secondary trading and possible retail access planned for later stages.

India's Securities and Exchange Board and Reserve Bank have launched Demat 2.0, a pilot that records corporate bonds on distributed-ledger infrastructure and settles the payment side with the wholesale digital rupee. SEBI formally confirmed the successful launch on September 10 at the Global Fintech Fest in Mumbai.

Three issuers open the pilot

Financial Express reported that REC Limited and Larsen & Toubro each issued ₹500 crore of tokenized bonds, while IIFL Finance issued ₹25 crore, taking the first group to ₹1,025 crore. The program begins with institutional investors rather than a public retail offering.

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Indian Express said the initiative brings together the country's regulated depositories, exchanges, banks and payments infrastructure, including CDSL, NSDL, BSE, NSE, HDFC Bank, ICICI Bank and NPCI. The participants are testing new settlement rails inside the existing legal and supervisory framework rather than moving securities to an open public blockchain.

Digital bonds meet central-bank money

Under Demat 2.0, ownership of a corporate bond can be represented as a digital token on a ledger operated by regulated market institutions. The payment leg connects to the RBI's wholesale central bank digital currency through the Unified Market Interface, allowing the security and money to move together.

This structure is designed to support delivery versus payment, sometimes called atomic settlement: the bond changes hands only when the corresponding digital-rupee payment is completed. Coordinating both legs on connected infrastructure can reduce the risk that one side of a transaction settles while the other fails.

Conventional investor rights remain

The bonds still have ordinary legal terms, including interest rates, maturity dates and investor rights. Tokenization changes how issuance, ownership records and settlement are processed; it does not by itself alter the issuer's repayment obligation or turn the securities into cryptocurrencies.

Smart contracts may automate servicing tasks such as interest payments and redemptions. Today, issuers and registrars typically obtain bondholder records, calculate amounts and route payments through separate systems; a shared authorized ledger could reduce repeated file transfers, reconciliations and validations.

Why regulators are starting with institutions

Institutional-only access gives regulators and infrastructure operators a controlled environment for testing legal records, cyber resilience, privacy, transaction finality and interoperability. It also limits operational exposure while the participants assess whether the technology works reliably at market scale.

CoinDesk reported that secondary-market trading and retail participation are expected in later phases, but no universal public launch has been completed. Any expansion will depend on the pilot's results, detailed operating rules and the ability of investors and intermediaries to use compatible securities and digital-currency accounts.

A regulated route to asset tokenization

The project reflects India's distinction between privately issued cryptoassets and tokenized versions of supervised financial instruments. Demat 2.0 keeps identifiable issuers, regulated intermediaries and central-bank money at the center while testing whether distributed ledgers can improve settlement efficiency.

What comes next

The immediate questions are how quickly a secondary market can develop, whether settlement remains dependable across institutions and how corporate actions are handled in production conditions. Regulators will also need to explain eligibility, custody, dispute resolution and investor protections before the model can extend meaningfully to retail users or other assets. Published technical standards and performance data will determine whether the pilot can move beyond its controlled first phase.

Sources

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