India starts tokenizing $620 billion corporate bond market with digital rupee settlement

India has launched a pilot that converts corporate bonds into digital tokens as part of SEBI’s Demat 2.0 program. Under the pilot, ownership of bonds will be represented by tokens rather than only traditional electronic records, and payment for these tokenized instruments will be settled using the RBI’s wholesale version of the digital rupee. The initiative applies to the country’s corporate bond market, which totals about $620 billion, and is designed in stages. The initial phase focuses on tokenization and wholesale digital-rupee settlement; subsequent phases are planned to introduce secondary-market trading and to open participation to retail investors. By linking tokenized securities to a central bank digital currency, the pilot aims to integrate modern ledger-based representation of instruments with an official settlement medium. SEBI’s Demat 2.0 pilot thus represents an effort to update post-trade infrastructure by combining tokenization technology with RBI-issued digital money. Officials have indicated that broader trading capabilities and retail access will follow later in the rollout, moving the project beyond pilot settlement to a fuller market ecosystem. The phased approach is intended to test technical integration and operational readiness before expanding use cases and participant types.