India launches tokenized bond pilot with $107M issued
India’s securities regulator has begun a pilot for tokenized corporate bonds under a new Demat 2.0 infrastructure, with three issuers selling a combined 10.25 billion rupees (about $107 million). The system links tokenized securities to the Reserve Bank of India’s wholesale CBDC and aims to speed settlement and automate payments via smart contracts.
Why It Matters
If adopted more widely, the rollout could change how Indian bond markets settle trades by enabling same-day, atomic settlement and built-in payment automation, while preserving existing legal protections for bondholders. The pilot will guide whether tokenized issuance and CBDC settlement can be integrated into regulated market infrastructure and opened to retail participants.
Key Facts
- Pilot launch: Tokenized corporate bond pilot launched by SEBI and connected to RBI wholesale CBDC
- Total issuance: 10.25 billion rupees (about $107 million) issued in the pilot
- Issuers: REC (5 billion rupees), Larsen & Toubro (5 billion rupees), IIFL (250 million rupees)
- Investor counts: REC: 18 investors; L&T: 4 investors; IIFL: 1 investor
- Settlement feature: Issuers receive funds on the day of bidding via atomic settlement; smart contracts can automate interest and redemption payments.
India’s securities regulator has started a pilot to issue corporate bonds as digital tokens under a new Demat 2.0 market infrastructure. Three companies — state-run lender REC, engineering conglomerate Larsen & Toubro (L&T), and non-bank lender IIFL — issued a total of 10.25 billion rupees (about $107 million) through the platform, with REC and L&T each selling 5 billion rupees and IIFL selling 250 million rupees.
Demat 2.0 records bonds natively on a distributed ledger maintained by the nation’s statutory depositories and links to the Reserve Bank of India’s wholesale central bank digital currency through a Unified Market Interface. SEBI said this setup enables atomic settlement, removing the time gap between movement of securities and funds, and allows smart contracts to automate payments such as interest and redemptions.
The pilot has already delivered same-day receipt of funds for issuers instead of the usual two- to three-day lag. Investors can hold the tokenized bonds in their existing Demat accounts without opening new accounts or repeating Know-Your-Customer checks; however, participants must enable Demat 2.0 with their depository and hold a wholesale CBDC wallet at a participating bank to settle trades.
SEBI described India as the first country to combine native distributed-ledger issuance, statutory-depository ownership records and CBDC settlement within existing regulated market infrastructure. The regulator emphasized that tokenization does not alter the legal status of bonds or investor protections. SEBI said the pilot will continue and that later phases plan to add secondary trading via request-for-quote platforms and expand access to retail investors, with lessons from the trial informing any broader rollout.
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