India has started a pilot program to issue and settle corporate bonds as blockchain tokens, an early step toward bringing distributed-ledger technology into the country’s $620 billion corporate bond market through the digital rupee.
Demat 2.0 unveiled by SEBI and the RBI
The Securities and Exchange Board of India, or SEBI, introduced the program last week with the Reserve Bank of India. The project is called “Demat 2.0.” SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra presented it at the Global Fintech Fest.
Under the framework, a corporate bond is issued as a native digital token on a private, permissioned ledger. That ledger is operated by India’s statutory depositories, NSDL and CDSL.
Three issuers have already raised funds through the framework
So far, three companies have used the system, raising a combined 1,025 crore rupees, or about $107 million.
- State-owned lender REC went first on Sept. 7 and raised 500 crore rupees from 18 investors. It described the deal as India’s first tokenized corporate bond.
- Larsen & Toubro followed with another 500 crore rupees.
- Non-bank lender IIFL Finance raised 25 crore rupees.
Token ledger linked to wholesale digital rupee
The system connects the token ledger to the RBI’s wholesale digital rupee through a Unified Market Interface. That allows atomic settlement, meaning the bond and the payment change hands at the same time.
For issuers, that means proceeds can arrive on the bidding day instead of days later. Smart contracts can also automate interest payments and redemptions.
Legal structure stays the same as secondary trading is planned
SEBI said the bonds themselves remain legally unchanged. They keep their credit ratings, debenture trustees, listing rules, and investor protections. The regulator also said the market will not be fragmented.
Investors can hold the tokens in their existing Demat accounts without new know-your-customer checks. Later phases of the program are expected to add secondary trading and, eventually, retail access.
India keeps private crypto at a distance while backing blockchain on its own terms
According to Decrypt, India has generally kept private cryptocurrencies at arm’s length while moving ahead with blockchain-based infrastructure under its own policy approach. That includes the RBI-backed digital rupee and an earlier push by a lawmaker to use tokenization to broaden investment access for the middle class.