- SEBI and RBI launched the Demat 2.0 pilot for tokenized corporate bonds in a $620 billion market.
- REC, Larsen & Toubro, and IIFL Finance raised a combined 1,025 crore rupees, about $107 million.
- The pilot uses the wholesale digital rupee for atomic settlement and plans secondary trading in later phases.
India bond tokenization has moved into a live pilot as the country begins issuing and settling corporate bonds as digital tokens in a market valued at $620 billion. The program, called Demat 2.0, was launched by the Securities and Exchange Board of India and the Reserve Bank of India, with the system running on a permissioned ledger operated by NSDL and CDSL. Three issuers have already used the framework to raise a combined 1,025 crore rupees, or about $107 million. The setup also connects to the RBI’s wholesale digital rupee, allowing simultaneous transfer of the bond and payment while keeping existing legal terms and investor protections in place.
India bond tokenization begins with Demat 2.0
The new pilot was unveiled last week by SEBI alongside the RBI. SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra presented Demat 2.0 at the Global Fintech Fest. The initiative marks an early step in bringing distributed-ledger technology into India’s corporate bond market.
Under this framework, a corporate bond is created as a native digital token rather than being represented separately after issuance. The tokens are issued on a private, permissioned ledger operated by India’s statutory depositories, NSDL and CDSL, which are central to the structure of the pilot.
How the first issuers used India bond tokenization
Three companies have already raised funds through the new system. State-owned lender REC was the first to use the framework on Sept. 7, raising 500 crore rupees from 18 investors. REC described that issuance as India’s first tokenized corporate bond.
After REC, Larsen & Toubro raised another 500 crore rupees through the pilot. Non-bank lender IIFL Finance followed with 25 crore rupees. Together, the three issuers raised 1,025 crore rupees, which the source equates to about $107 million.
Settlement and protections under the pilot
The system links the token ledger to the RBI’s wholesale digital rupee through a Unified Market Interface. This enables atomic settlement, meaning the bond and the payment move at the same time. According to the source, that can allow issuers to receive proceeds on the bidding day instead of waiting additional days.
Smart contracts are also built into the framework to automate interest payments and redemptions. At the same time, SEBI said the legal nature of the bonds does not change. The instruments keep their credit ratings, debenture trustees, listing rules, and investor protections, and SEBI said the market will not be fragmented.
Next phases for India bond tokenization
SEBI said investors will be able to hold these tokenized bonds in existing Demat accounts. The source also said no fresh know-your-customer checks are required for that step, which keeps the process tied to existing market infrastructure.
Later phases of the project are set to add secondary trading and, after that, retail access. The source also noted that India has generally kept private cryptocurrencies at arm’s length while adopting blockchain through efforts such as the RBI-backed digital rupee and earlier calls from a lawmaker to use tokenization to broaden investment access for the middle class.
Conclusion
India bond tokenization has started with a pilot that combines digital bond issuance, a permissioned ledger, and settlement through the wholesale digital rupee. Demat 2.0 is already in use by REC, Larsen & Toubro, and IIFL Finance, which together raised about $107 million, showing that the framework is moving beyond a concept stage. The pilot also preserves the legal terms, ratings, and protections attached to the bonds while using smart contracts for operational tasks such as interest payments and redemptions. With secondary trading and retail access planned for later phases, the program sets out a structured path for expanding tokenized corporate bonds in India.
Disclaimer
The information provided in this article is for informational purposes only and should not be considered financial advice. The article does not offer sufficient information to make investment decisions, nor does it constitute an offer, recommendation, or solicitation to buy or sell any financial instrument. The content is opinion of the author and does not reflect any view or suggestion or any kind of advise from CryptoNewsBytes.com. The author declares he does not hold any of the above mentioned tokens or received any incentive from any company.
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