India has issued tokenized corporate bonds worth ₹1,025 crore, or around $116 million, across three transactions settled through the Reserve Bank of India’s wholesale digital rupee.
SEBI said on Sept. 10 that the Demat 2.0 pilot links a distributed ledger operated by India’s statutory depositories with the RBI’s Unified Market Interface. Under the system, the bond and its payment are transferred together through atomic settlement.
REC Limited completed the first issuance on Sept. 7, securing ₹500 crore from 18 investors. Larsen & Toubro completed the second transaction on Sept. 9, with four investors purchasing a ₹500 crore bond. On the same day, IIFL issued ₹25 crore to a single investor.
The Securities and Exchange Board of India and the RBI unveiled the pilot at the Global Fintech Fest in Mumbai. SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra jointly presented the project.
India’s Tokenized Bonds Remain Traditional Securities
Demat 2.0 changes the way ownership, settlement and bond servicing are recorded. It does not introduce a new type of security or change the issuer’s existing repayment obligations.
Each tokenized bond keeps its predetermined interest rate, maturity date and legal rights. Existing rules for credit ratings, debenture trustees, exchange listings and corporate disclosures remain applicable.
Ownership records are maintained on a distributed ledger operated by India’s regulated depositories. Investors continue to hold the securities through their existing demat accounts, so participants do not need a separate securities account or an additional identity verification.
Participation still requires investors to activate Demat 2.0 through the relevant depository. They must also maintain a wholesale digital rupee wallet with a participating bank, as payments are settled using the RBI-issued currency.
SEBI described the framework as India’s first corporate bond issuance built natively on a distributed ledger, with statutory depositories maintaining ownership records and a central bank digital currency handling the cash settlement. Comparable initiatives in other markets have generally relied on platforms developed for in
India’s National Institute of Securities Markets estimated the nation’s corporate bond market at ₹53.64 lakh crore, or about $627 billion, in September 2025. The figure broadly aligns with the reported $620 billion market estimate, but it does not reflect the amount being brought into the pilot.
So far, only ₹1,025 crore has been issued through Demat 2.0. SEBI has not established any target for the volume of bonds expected to shift onto the system.
Digital Rupee Settlement Connects Both Sides of Each Trade
Demat 2.0 links the bond ledger with the RBI’s wholesale central bank digital currency through the Unified Market Interface. With atomic settlement, the tokenized security and its payment in digital rupees are transferred together as a single transaction.
Traditional bond issuance may rely on separate systems for securities allocation and fund transfers. SEBI said issuers typically received the proceeds two to three days after bidding under the earlier process. Under the pilot, issuers can receive payment on the same day as bidding.
The regulator said atomic settlement eliminates the risk of one side of a transaction being completed while the other does not. Its statement presented the reduction in settlement risk as a feature of the pilot rather than an outcome confirmed through an independent performance assessment.
Corporate actions can be executed through smart contracts on the depository’s distributed ledger. Interest payments and bond redemptions are automatically scheduled for transfer to investors’ wholesale digital rupee wallets on their respective due dates.
Under the existing servicing process, an issuer or registrar must obtain the bondholder list, calculate individual payments and transfer the funds through banking channels. In the pilot, authorized institutions can access the ownership record, while programmed instructions initiate the payment process.
SEBI expects the framework to cut down on manual file sharing, reconciliation and validation tasks. However, the regulator has not published audited data showing any reductions in operating costs or error rates from the first three issuances.
India’s use of central bank-backed money differs from crypto-based tokenized securities that are traded using privately issued stablecoins or other digital assets. As reported, Uniswap v4 had $59.1 million in tokenized stock deposits as of Sept. 6, based on data from Token Terminal. Those deposits operate within decentralized finance applications, whereas Demat 2.0 functions through regulated depositories and participating b
Three Issuers Have Tested India’s Demat 2.0 System
State-owned REC launched the pilot on Sept. 7 with a ₹500 crore transaction. Separate details issued in connection with the deal listed a 7.30% coupon and a maturity period of one year and nine months.
REC initially offered ₹100 crore, along with a ₹400 crore greenshoe option. According to the company’s reported transaction details, investors submitted bids worth ₹796 crore, well above the final amount that was issued.
Larsen & Toubro carried out the pilot’s second transaction two days later. Four investors purchased the company’s ₹500 crore bond. SEBI did not reveal their identities, individual investment amounts or the bond’s coupon in its pilot announcement.
IIFL completed the pilot’s third transaction on Sept. 9, issuing ₹25 crore to one investor. The regulator did not disclose the buyer’s identity or provide details on why only a single participant was involved in the transaction.
The three transactions involved a combined 23 investors, assuming no investor participated in more than one deal. SEBI did not release a list that could be used to verify whether any investors overlapped.
The announcement was not followed by any verified market response. SEBI did not release secondary-market prices, trading yields or figures indicating whether the issuers’ listed shares changed after the transactions.
Later Phases Will Bring Trading and Retail Access
The initial phase continues to concentrate on corporate bond issuance. SEBI said fresh offerings are still underway, but the regulator has not disclosed the next issuers, deal sizes or expected launch dates.
The next phase is expected to link tokenized bonds with India’s existing request-for-quote platforms. This planned upgrade would allow eligible investors to trade the securities after issuance while keeping those transactions within the existing regulated market framework
SEBI said secondary-market sellers could receive digital-rupee payments immediately, compared with the earlier settlement window of two to three days. The regulator has yet to announce when this trading phase will be launched.
Retail investors are expected to be included in a later phase. Individuals would continue using their existing demat accounts, but Demat 2.0 access would need to be activated along with a compatible digital rupee wallet.
The RBI has already used its wholesale digital rupee in controlled financial-market transactions. In related developments, U.S. Bank tested a proprietary digital dollar on Stellar, but the pilot featured a bank-issued token rather than a currency issued by a central bank.
India’s framework remains distinct from the public cryptocurrency market. Bond transactions are not settled using private tokens, and the securities are not traded on decentralized exchanges.
SEBI said insights gained from the issuance, secondary-trading and retail phases will shape any future expansion. The regulator has not committed to a nationwide rollout or set deadlines for determining whether Demat 2.0 will advance beyond its pilot stage.
