India launches bond tokenisation pilot
RWA Signal Insight
InfrastructureThe Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) have officially launched a bond tokenisation pilot program titled Demat 2.0. This initiative aims to leverage distributed ledger technology to achieve near-instant settlement and mitigate systemic settlement risks within the Indian financial markets. The pilot involves key infrastructure participants including the Central Depository Services, National Securities Depositories, and major financial institutions such as HDFC and ICICI. By integrating security and settlement processes, the project seeks to automate complex asset servicing tasks that currently rely on legacy systems. This move represents a significant evolution from the original Demat 1.0 framework, which digitized paper-based shareholdings starting in 1996. SEBI chairman Tuhin Kanta Pandey indicated that the scope of this tokenization effort is intended to expand beyond bonds to include equities, gold, and mutual funds. The successful implementation of this pilot could serve as a blueprint for other emerging markets looking to modernize their national financial infrastructure through blockchain integration.
Key points
- SEBI and RBI launched Demat 2.0 to pilot bond tokenization for instant settlement.
- Participants include Central Depository Services, National Securities Depositories, HDFC, and ICICI.
- Future expansion plans include tokenizing equities, gold, and mutual funds.
- Demat 2.0 succeeds the 1996 Demat 1.0 initiative that digitized paper share certificates.
Background
SEBI is the primary regulatory body for the securities market in India, responsible for protecting investor interests and promoting market development. The RBI serves as India's central bank, managing monetary policy and overseeing the country's payment and settlement systems. Together, they regulate the financial infrastructure that facilitates the trading and custody of securities for millions of investors.