The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have launched a pilot infrastructure for issuing, holding, trading, and settling corporate bonds as digital tokens.
Called Demat 2.0, the model is being integrated directly into the nation’s existing regulated securities market, unlike many tokenization experiments built on standalone blockchain platforms.
$116M Tokenized and Counting
India’s approach 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. As written on Demat 2.0’s explanatory page, the system is connected to the RBI’s wholesale digital rupee through its Unified Market Interface. This allows the securities and cash legs of a transaction to settle at the same time.
This so-called 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. The statement also noted that three companies have already issued tokenized bonds worth a total of ₹1,025 crore (or $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.
SEBI said 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.
Beyond Bonds?
The statement noted that tokenized bonds remain legally identical to conventional ones as existing rules covering credit ratings, disclosures, debenture trustees, and investor protection continue to apply. Given the evident growth of the real-world asset (RWA) industry, India’s authorities said the rollout of their local system will come in three stages.
The current phase is focused on institutional corporate bond issuance. The second 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.
The infrastructure remains private and permissioned, with nodes initially operated by depositories and stock exchanges. This is important because India’s initiative is not an attempt to move its securities markets onto public blockchains; rather, it aims to combine DLT-based ownership, smart contracts, and central-bank money within its existing financial system.
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