Key facts
- India launched a tokenized corporate bond pilot with three companies issuing 10.25 billion rupees ($107 million).
- The Securities and Exchange Board of India (SEBI) stated Demat 2.0 allows corporate bonds to be issued as digital tokens on a distributed ledger.
- The system connects to the Reserve Bank of India’s wholesale CBDC via the Unified Market Interface.
- REC raised 5 billion rupees, Larsen & Toubro raised 5 billion rupees, and IIFL issued 250 million rupees.
- Atomic settlement removes delays between money and bond movement, with smart contracts automating payments.
- Later phases will introduce secondary trading and retail investor access.
India's securities regulator and central bank have launched a pilot program for tokenized corporate bonds, with three companies issuing a combined 10.25 billion rupees (approximately $107 million) through the new market infrastructure. The Securities and Exchange Board of India (SEBI) announced on Thursday that Demat 2.0 enables corporate bonds to be issued and held as digital tokens on a distributed ledger managed by the country's statutory depositories. This system integrates with the Reserve Bank of India's (RBI) wholesale central bank digital currency (CBDC) via its Unified Market Interface.
REC, a public-sector lender, initiated the first issuance, raising 5 billion rupees from 18 investors on Monday. Engineering conglomerate Larsen & Toubro (L&T) followed on Wednesday, securing another 5 billion rupees from four investors. Non-bank lender IIFL also issued 250 million rupees in bonds to a single investor on the same day.
The new infrastructure allows issuers to receive funds on the same day they bid, eliminating the typical two-to-three-day delay. SEBI highlighted that atomic settlement synchronizes the movement of money and bonds, while smart contracts can automate interest and redemption payments.
Initially reported as a plan for REC to issue less than 5 billion rupees, the pilot has expanded to include two additional issuers, more than doubling the originally anticipated amount. Issuances under this first phase are ongoing. SEBI indicated that subsequent phases will incorporate secondary trading through existing request-for-quote platforms and open access to retail investors, with insights from the pilot informing any broader rollout.
Investors can hold these tokenized bonds in their existing Demat accounts, avoiding the need for separate accounts or new Know-Your-Customer procedures. However, participants must enable Demat 2.0 through their depository and maintain a wholesale CBDC wallet with a participating bank for settlement.
SEBI stated that India is the first country to combine bonds natively issued on a distributed ledger, ownership records maintained by statutory depositories, and settlement in CBDCs within existing regulated market infrastructure. The regulator emphasized that tokenization does not alter the legal status, repayment obligations, or investor protections associated with the bonds.