India’s Securities and Exchange Board of India, or SEBI, has started the Demat 2 pilot this week, bringing tokenized corporate bond issuance onto distributed ledgers operated by regulated market institutions. Settlement in the pilot is being completed with the Reserve Bank of India’s wholesale digital rupee rather than through a conventional process.
The report says India’s corporate bond market is worth about $620 billion. State-owned power sector lender REC raised 50 billion rupees, about $56 million, through the system. Engineering and construction giant Larsen & Toubro refinanced 50 billion rupees, while non-bank lender IIFL Finance raised 2.5 billion rupees, about $2.8 million. That puts the total funding volume at roughly 102.5 billion rupees.
The bonds keep the same core features as conventional debt, including fixed coupon terms, maturity dates, and investor rights. What changes is the settlement process: tokenized bonds and the digital rupee used for purchase can settle at the same time, cutting transaction risk. Later phases are expected to add smart contracts for coupon payments and redemptions, open secondary market trading, and eventually expand access to retail investors. According to ChainCatcher, the pilot shows India introducing tokenization inside a financial system that remains tightly regulated while the country maintains a cautious stance toward private cryptocurrencies.
SEBI has launched the Demat 2 pilot this week, according to ChainCatcher, allowing corporate bonds to be issued as digital tokens on distributed ledgers run by regulated market institutions and settled with the Reserve Bank of India’s wholesale digital rupee.
Initial deals total about 102.5 billion rupees
India’s corporate bond market is worth about $620 billion. In the first set of transactions, state-owned power sector lender REC raised 50 billion rupees, about $56 million, through the system. Engineering and construction giant Larsen & Toubro refinanced 50 billion rupees. Non-bank lender IIFL Finance raised 2.5 billion rupees, about $2.8 million. Combined, the total comes to about 102.5 billion rupees.
Bonds keep their core terms while settlement changes
The bonds still carry fixed interest rates, maturity dates, and investor rights. The difference is that tokenized bonds and the digital rupee used to buy them can settle simultaneously, which reduces transaction risk.
Next phases include smart contracts and secondary trading
Later stages of the pilot will add smart contracts to handle corporate actions such as interest payments and redemptions. The plan also includes opening secondary market trading and, at a later stage, making the market available to retail investors.
ChainCatcher said India has remained cautious toward private cryptocurrencies. The pilot introduces tokenization inside a financial system already under its control.
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