Key facts
- India launched a pilot program to tokenize its $620 billion corporate bond market.
- The program, "Demat 2.0," uses a permissioned ledger operated by depositories NSDL and CDSL.
- Three companies—REC, Larsen & Toubro, and IIFL Finance—raised a combined 1,025 crore rupees (~$107 million).
- The system enables atomic settlement via the RBI's wholesale digital rupee.
- Smart contracts will automate interest payments and redemptions.
- Bonds retain their legal terms, ratings, and investor protections.
India has initiated a pilot program to integrate blockchain technology into its substantial $620 billion corporate bond market, a move aimed at modernizing financial infrastructure. The Securities and Exchange Board of India (SEBI), in collaboration with the Reserve Bank of India (RBI), launched the initiative named "Demat 2.0." This program allows corporate bonds to be issued and settled as digital tokens on a private, permissioned ledger managed by the country's depositories, NSDL and CDSL.
Three prominent companies have already participated in the pilot. State-owned lender REC was the first, raising 500 crore rupees on September 7. This was followed by Larsen & Toubro, which also raised 500 crore rupees, and non-bank lender IIFL Finance, which raised 25 crore rupees. The total raised across these three issuers amounts to 1,025 crore rupees, approximately $107 million.
The system is designed to facilitate simultaneous exchange of bonds and payments through a link with the RBI's wholesale digital rupee, enabling atomic settlement. This process is expected to expedite fund disbursement to issuers and automate interest payments and redemptions via smart contracts. SEBI emphasized that the tokenized bonds maintain their original legal terms, credit ratings, and investor protections, ensuring market integrity and preventing fragmentation. Future phases of the program plan to introduce secondary trading and eventually broaden access to retail investors.