India has taken a significant step toward integrating tokenized real-world assets into its mainstream financial system. The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have launched a pilot infrastructure called Demat 2.0 for issuing, holding, trading, and settling corporate bonds as digital tokens.
Unlike many tokenization experiments built on standalone blockchain platforms, Demat 2.0 is being integrated directly into India's existing regulated securities market. Corporate bonds are created natively on a distributed ledger maintained by market infrastructure institutions, with ownership records held by the country's statutory depositories.
Atomic Settlement and Immediate Funding
The system is connected to the RBI's wholesale digital rupee through its Unified Market Interface, enabling securities and cash legs of a transaction to settle simultaneously. This atomic delivery-versus-payment model eliminates the settlement delay that occurs when one party transfers an asset while waiting for the other to complete payment.
Under Demat 2.0, issuers can receive funds on the same day as bidding, compared with the traditional two-to-three-day process. Secondary-market investors can receive their proceeds immediately.
Early Adoption and Scale
Three companies have already issued tokenized bonds worth a combined ₹1,025 crore ($116 million). REC Limited became the first issuer on September 7, raising ₹500 crore from 18 investors. Larsen & Toubro followed with the same amount from four investors, while IIFL raised ₹25 crore from a single investor on September 9.
Technology and Investor Experience
Smart contracts can automate coupon and redemption payments directly into investors' CBDC wallets. Investors can use their existing demat accounts rather than create separate blockchain wallet infrastructure.
Tokenized bonds remain legally identical to conventional bonds, with existing rules covering credit ratings, disclosures, debenture trustees, and investor protection continuing to apply.
Planned Expansion
India's authorities have outlined a three-stage rollout. The current phase focuses on institutional corporate bond issuance. The second stage will introduce secondary-market trading and expand access to retail investors, while the third could bring additional regulated entities onto the network and explore tokenization of other financial instruments.
The infrastructure remains private and permissioned, with nodes initially operated by depositories and stock exchanges. India's initiative aims to combine distributed-ledger-based ownership, smart contracts, and central-bank money within its existing financial system rather than move securities markets onto public blockchains.
