India has begun testing blockchain-based corporate bonds as the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have launched Demat 2.0, a pilot to test tokenized corporate bonds using distributed ledger technology.
The pilot covers India’s $620 billion corporate bond market and uses the RBI’s digital rupee for settlement.
In a recent announcement, SEBI said Demat 2.0 allows corporate bonds to be issued and held as digital tokens on a distributed ledger managed by India’s statutory depositories.
The system is also linked to the RBI’s wholesale digital rupee through its Unified Market Interface. This enables atomic delivery-versus-payment, meaning the bond and payment can change hands at the same time.
The main goal of the pilot is to make bond settlement faster and reduce the risk of failed transactions.
SEBI said India is the first country to combine natively issued distributed-ledger bonds, statutory depository ownership records and CBDC settlement within existing regulated market infrastructure.
The first phase has already seen three companies raise a combined ₹1,025 crore ($116 million) through tokenized bonds.
State-owned power lender REC and engineering company Larsen & Toubro (L&T) each issued ₹500 crore, while IIFL Finance raised another ₹25 crore.
Despite using blockchain infrastructure, the bonds keep their normal coupon rates, maturity terms, and investor rights.
The system also connects with India’s existing financial network, including NSDL, CDSL, NSE, BSE, HDFC Bank and ICICI Bank.
India, investors do not need a separate account to hold these tokenized bonds. They can keep them in their existing Demat accounts, although they need to enable Demat 2.0 through their depository.
For settlement, participants also need a wholesale CBDC wallet with a participating bank.
The pilot could eventually expand beyond issuance and settlement. SEBI plans to test secondary trading through existing request-for-quote platforms and later explore access for retail investors.
For now, the $116 million pilot gives regulators and market participants a real-world test of whether tokenized bonds and digital rupee settlement can work at scale.
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