India has launched Demat 2.0, a new pilot project that brings tokenised corporate bonds onto distributed-ledger technology and connects them to the Reserve Bank of India’s wholesale digital rupee.
The initiative was launched by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) on September 10, 2026, at the Global Fintech Fest in Mumbai. SEBI describes the project as a test of how distributed-ledger technology can improve the issuance, settlement and servicing of corporate bonds.
According to SEBI’s official announcement, three companies have already issued tokenised corporate bonds with a combined value of ₹1,025 crore, or roughly $107 million.
REC Limited was the first issuer, raising ₹500 crore from 18 investors on September 7. Larsen & Toubro subsequently issued another ₹500 crore, while IIFL issued ₹25 crore.
Bonds remain legally unchanged
The technology does not create a new type of security. SEBI states that the tokenised bonds retain the same issuer obligations, investor rights, credit ratings, maturity terms and other legal characteristics as conventional corporate bonds.
The difference lies in the underlying infrastructure.
Instead of recording ownership only through conventional securities infrastructure, the bonds are represented as digital tokens on a distributed ledger operated by market infrastructure institutions.
The system connects this ledger with the RBI’s wholesale central bank digital currency through the Unified Market Interface.
This allows the bond and the corresponding payment to settle together. Such an atomic settlement mechanism can reduce settlement risk because the transfer of the security and the transfer of funds do not have to occur independently.
Smart contracts could automate bond payments
Demat 2.0 is also designed to automate parts of the servicing process.
Interest payments and redemptions could eventually be handled through smart contracts. Authorised institutions would have access to the relevant bondholder information through the shared ledger, while payments could be transferred using the RBI’s wholesale digital rupee infrastructure.
The objective is to reduce manual reconciliation, file transfers and other operational steps currently involved in servicing corporate bonds.
Retail investors could follow later
The current pilot is focused on institutional issuance. SEBI plans to expand the system in later phases to secondary-market trading and eventually retail participation.
That could make the experiment particularly significant for India’s broader tokenisation strategy.
Rather than creating an entirely separate financial market, India is testing blockchain-based infrastructure inside its existing regulated securities system. The approach combines tokenised assets, a central bank digital currency and existing exchanges, banks and securities depositories.
For the wider digital-asset industry, the development is notable because it shows how blockchain technology can be adopted by a major financial market even while India maintains a cautious regulatory approach toward privately issued cryptocurrencies.
If the pilot proves successful, the same infrastructure could potentially be extended beyond corporate bonds to other financial assets.
Source:
- Securities and Exchange Board of India (SEBI) – Demat 2.0 Pilot
- FAQs on Demat 2.0: Pilot for Tokenised Corporate Bonds (PDF)