India's Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have launched Demat 2.0, a pilot program to issue and settle corporate bonds as digital tokens on a private, permissioned ledger. The initiative targets India's $620 billion corporate bond market.
The program was unveiled at the Global Fintech Fest, with SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra presenting the framework. The system operates on a private ledger run by India's statutory depositories, NSDL and CDSL.
Three companies have already participated in the pilot, raising a combined 1,025 crore rupees, approximately $107 million. REC, a state-owned lender, raised 500 crore rupees from 18 investors on September 7, followed by Larsen & Toubro with 500 crore rupees and IIFL Finance with 25 crore rupees.
The tokenized bonds link to the RBI's wholesale digital rupee through a Unified Market Interface, enabling atomic settlement where the bond and payment transfer simultaneously. This allows issuers to receive proceeds on the bidding day rather than after a delay. Smart contracts automate interest payments and redemptions.
SEBI has stated that the bonds retain their legal terms, credit ratings, debenture trustees, listing rules, and investor protections. Investors can hold the tokens in existing Demat accounts without additional know-your-customer checks. The regulator emphasized that the market will not be fragmented.
Future phases of the program are planned to introduce secondary trading and retail access to tokenized bonds.
