India’s tokenized bond pilot starts with institutions, with retail access planned next

The Securities and Exchange Board of India (SEBI) has launched a pilot program titled Demat 2.0 to facilitate the issuance and settlement of corporate bonds on a private, permissioned distributed ledger. The initiative successfully processed ₹1,025 crore across three initial issuances from REC Limited, L&T Limited, and IIFL. By utilizing the Reserve Bank of India’s wholesale digital rupee, the system achieves atomic delivery-versus-payment, ensuring that the bond transfer and cash settlement occur simultaneously. This synchronization eliminates settlement risk by removing the time gap between fund transfer and security delivery. While the bonds exist as native digital tokens, they retain their original ISIN identifiers, legal covenants, and regulatory status, ensuring continuity for market participants. The infrastructure is managed by India’s depositories and stock exchanges, which maintain the authoritative records of ownership and handle private key management on behalf of investors. This pilot represents a significant step toward modernizing India's debt markets by integrating central bank digital currency with institutional-grade blockchain rails. Future stages of the project aim to expand the system to include secondary market trading and retail investor participation.