India Demat 2.0 Settles 116 Million USD in Tokenized Bonds With Wholesale Digital Rupee

India has moved one of the world’s largest corporate bond markets a step closer to blockchain-native settlement. Regulator SEBI announced on Sept. 10 that the Demat 2.0 pilot has issued 1,025 crore rupees, roughly 116 million USD, in tokenized corporate bonds across three transactions, with every cash leg settled in the Reserve Bank of India’s wholesale digital rupee.

The pilot connects a distributed ledger operated by India’s statutory depositories to the RBI’s Unified Market Interface for bonds. The design moves the security and its payment through atomic settlement, meaning delivery of the tokenized bond and payment in central bank digital currency execute as a single transaction, eliminating the risk that one leg completes while the other fails.

Three issuers, 23 investors

REC Limited, a state-owned infrastructure financier, completed the pilot’s first native distributed-ledger issuance on Sept. 7, raising 500 crore rupees from 18 investors. The bond carried a 7.30% coupon with a maturity of one year and nine months, and demand ran well past the print: REC initially offered 100 crore rupees with a 400 crore greenshoe option and received 796 crore in bids.

Engineering conglomerate Larsen & Toubro followed on Sept. 9 with a 500 crore rupee issuance purchased by four investors. IIFL completed the third transaction the same day, issuing 25 crore rupees to a single investor. Combined participation reached 23 investors, assuming no overlap between deals, and SEBI did not disclose buyer identities for the later transactions.

The pilot was unveiled jointly at the Global Fintech Fest in Mumbai by SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra, presenting a rare instance of a securities regulator and central bank launching a shared market infrastructure project.

Conventional securities, faster rails

SEBI has been careful to frame the scope. Demat 2.0 changes how ownership, settlement and bond servicing are recorded; it does not create a new asset class or alter issuer repayment obligations. Each tokenized bond retains its fixed interest rate, maturity and legal rights, and existing requirements for credit ratings, debenture trustees, exchange listings and disclosures continue to apply. Investors hold the securities through their existing demat accounts, so no separate securities account or fresh identity check is required.

The efficiency argument is tangible. Under the previous process, SEBI said issuers generally received funds two to three days after bidding. The pilot allows an issuer to be paid on the bidding day itself. Corporate actions also move on-chain: interest payments and redemptions are programmed as smart contracts on the depository ledger, delivering funds automatically to investors’ wholesale digital rupee wallets on their due dates, replacing the manual cycle of registrar-compiled holder lists, per-payment calculations and banking-channel transfers.

SEBI expects the structure to reduce manual file sharing, reconciliation and validation work, though the regulator has not published audited figures on cost reductions or error rates from the first three issuances, and describes the settlement-risk benefit as a design feature rather than a finding from independent review.

What sets India’s approach apart

India’s use of central bank money is the distinguishing detail. Tokenized securities projects in other markets have typically settled against privately issued stablecoins or relied on issuer-specific platforms. Demat 2.0 instead pairs regulated depositories maintaining ownership records with a wholesale CBDC settling the cash leg, a structure SEBI describes as India’s first native distributed-ledger corporate bond issuance of its kind.

The scale of the underlying market explains the ambition. India’s National Institute of Securities Markets valued the country’s corporate bond market at 53.64 lakh crore rupees, roughly 627 billion USD, as of September 2025. Only 1,025 crore rupees has moved through the pilot so far, and SEBI has not set a target for how much of the market eventually migrates.

Trading and retail come later

The first phase covers primary issuance only. SEBI says new offerings are continuing through the system, though it did not identify upcoming issuers, sizes or dates. A later phase will connect tokenized bonds to India’s existing request-for-quote platforms, allowing eligible investors to trade the securities post-issuance within the current regulated market structure, with sellers receiving digital rupee funds immediately rather than after the previous two-to-three day settlement window.

Retail access is planned for a subsequent stage. Individual investors would use their existing demat accounts, provided they activate Demat 2.0 access and hold a compatible digital rupee wallet with a participating bank. Participation even now requires a wholesale digital rupee wallet, which constrains the eligible investor base to institutions plugged into the RBI’s CBCC infrastructure.

The RBI has previously used its wholesale digital rupee for controlled financial-market transactions, and Demat 2.0 represents the most significant extension of that currency into securities settlement to date. For a market that has historically wrestled with thin secondary liquidity and heavy reliance on bank funding, the prospect of same-day issuance proceeds and programmable coupons is less about novelty than about compressing the cost of issuing and servicing corporate debt, one infrastructure upgrade at a time.