India’s securities regulator and central bank have launched a tokenized corporate bond pilot, with the first three issuers raising a combined 10.25 billion rupees, or about $107 million, through the new market infrastructure.
On Thursday, the Securities and Exchange Board of India (SEBI) said Demat 2.0 allows corporate bonds to be issued and held as digital tokens on a distributed ledger owned by India’s statutory depositories. The system connects to the Reserve Bank of India’s (RBI) wholesale central bank digital currency through its Unified Market Interface.
Three issuers took part in the first round
The first issuance came from public-sector lender REC, which raised 5 billion rupees from 18 investors on Monday.
Engineering conglomerate Larsen & Toubro (L&T) raised another 5 billion rupees from four investors on Wednesday. On the same day, non-bank lender IIFL issued 250 million rupees in bonds to one investor.
Together, the three issuers brought the opening size of the pilot to 10.25 billion rupees.
How Demat 2.0 handles issuance and settlement
SEBI said the new infrastructure allows issuers to receive funds on the day of bidding instead of two to three days later. According to the regulator, atomic settlement removes the delay between the movement of money and bonds, while smart contracts can automate interest payments and redemption.
Investors can hold the tokenized bonds in their existing Demat accounts without opening a separate account or completing new Know-Your-Customer checks.
Participants still need to enable Demat 2.0 through their depository and maintain a wholesale CBDC wallet with a participating bank in order to settle payments.
Pilot scope widened beyond the earlier REC plan
Reuters reported in August that India planned to test tokenized corporate bonds through an REC issuance of less than 5 billion rupees involving selected investors. The launch went beyond that initial plan by adding two more issuers, taking the total issuance amount to more than double what had originally been expected from REC alone.
Issuances under the first phase are still ongoing, SEBI said. Later phases will introduce secondary trading through existing request-for-quote platforms and extend access to retail investors. The regulator said experience from the pilot will guide any broader rollout.
SEBI says legal status remains unchanged
SEBI said India is the first country to combine bonds issued natively on a distributed ledger, ownership records maintained by statutory depositories, and settlement in CBDCs within existing regulated market infrastructure.
The regulator also said tokenization does not change the legal status of the bonds, repayment obligations, or investor protections.