India has issued ₹1,025 crore, approximately $116 million, in tokenized corporate bonds through three transactions settled with the Reserve Bank of India’s wholesale digital rupee.
Summary
- India’s Demat 2.0 pilot has issued ₹1,025 crore in tokenized corporate bonds across three companies.
- REC raised ₹500 crore from 18 investors through India’s first native distributed-ledger corporate bond issuance.
- Larsen & Toubro raised ₹500 crore, while IIFL completed a separate ₹25 crore tokenized issuance.
- The RBI wholesale digital rupee settles payment atomically through its Unified Market Interface for bonds.
- Later pilot phases will add secondary trading through existing RFQ platforms and access for retailers.
SEBI said on Sept. 10 that the Demat 2.0 pilot connects a distributed ledger owned by India’s statutory depositories with the RBI’s Unified Market Interface. The system moves the bond and its payment together through atomic settlement.
REC Limited completed the first issuance on Sept. 7, raising ₹500 crore from 18 investors. Larsen & Toubro followed on Sept. 9 with a ₹500 crore bond purchased by four investors. IIFL issued ₹25 crore to one investor on the same day.
The Securities and Exchange Board of India and the RBI announced the pilot during the Global Fintech Fest in Mumbai. SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra presented the project jointly.
India’s tokenized bonds remain conventional securities
Demat 2.0 changes how ownership, settlement and bond servicing are recorded. It does not create a new category of security or alter the issuer’s repayment obligations.
Each tokenized bond retains its fixed interest rate, maturity date and legal rights. Existing requirements covering credit ratings, debenture trustees, exchange listings and company disclosures continue to apply.
Ownership records sit on a distributed ledger maintained by India’s regulated depositories. Investors hold the securities through their existing demat accounts, meaning participants do not need a separate securities account or a new identity check.
Participation still requires an investor to activate Demat 2.0 with the relevant depository. Investors must hold a wholesale digital rupee wallet with a participating bank because payments settle in the RBI-issued currency.
SEBI described the structure as India’s first native distributed-ledger issuance of corporate bonds in which statutory depositories maintain ownership records and central bank digital currency settles the cash leg. Similar projects in other markets have often used platforms created for individual issuers.
India’s National Institute of Securities Markets valued the country’s corporate bond market at ₹53.64 lakh crore, or approximately $627 billion, in September 2025. The figure supports the reported $620 billion market estimate, but it does not represent the value entering the pilot.
Only ₹1,025 crore has been issued through Demat 2.0 so far. SEBI has not set a target for the amount of bonds that will move onto the system.
Digital rupee settlement joins both sides of each trade
Demat 2.0 connects the bond ledger to the RBI’s wholesale central bank digital currency through the Unified Market Interface. Atomic settlement means delivery of the tokenized security and payment in digital rupees occur as one transaction.
Conventional bond issuance can involve separate systems for allocating securities and transferring money. SEBI said issuers generally received funds two to three days after bidding under the previous process. The pilot allows an issuer to receive payment on the bidding day.
The regulator said atomic settlement removes the risk of one part of a transaction completing while the other fails. Its statement described the settlement-risk benefit as a feature of the pilot, not a finding from an independent performance review.
Corporate actions can run through smart contracts on the depository ledger. Interest payments and bond redemptions are programmed for delivery to investors’ wholesale digital rupee wallets on their due dates.
Existing servicing requires an issuer or registrar to obtain a list of bondholders, calculate each payment and send funds through banking channels. In the pilot, authorized institutions share access to the ownership record, while programmed instructions trigger the payment.
SEBI expects the structure to reduce manual file sharing, reconciliation and validation work. The regulator has not released audited figures measuring operating-cost reductions or error rates from the first three issuances.
India’s use of central bank money differs from crypto-based tokenized securities that trade against privately issued stablecoins or other digital assets. As crypto.news reported, Uniswap v4 held $59.1 million in tokenized stock deposits as of Sept. 6, according to Token Terminal. Those deposits sit within decentralized finance applications, while Demat 2.0 operates through regulated depositories and participating banks.
Three issuers have tested the Demat 2.0 system
State-owned REC opened the pilot with a ₹500 crore transaction on Sept. 7. Separate information released around the issuance described a 7.30% coupon and a maturity of one year and nine months.
REC initially offered ₹100 crore with a ₹400 crore greenshoe option. Investors submitted ₹796 crore in bids, according to the company’s reported transaction details, exceeding the final amount issued.
Larsen & Toubro completed the pilot’s second transaction two days later. Four investors purchased its ₹500 crore bond. SEBI did not disclose their identities, investment allocations or the bond’s coupon in its pilot announcement.
IIFL carried out the third transaction on Sept. 9, issuing ₹25 crore to a single investor. The regulator did not identify the buyer or explain why the deal involved only one participant.
Combined participation across the three deals reached 23 investors, assuming no investor appeared in more than one transaction. SEBI did not publish a list that would allow overlap to be checked.
No verified market reaction accompanied the announcement. SEBI did not provide secondary-market prices, trading yields or data showing changes in the issuers’ listed shares following the transactions.
Later phases will introduce trading and retail access
The first phase remains focused on corporate bond issuance. SEBI said new offerings are continuing, but the regulator did not identify the next companies, transaction sizes or launch dates.
A later phase will connect tokenized bonds to India’s existing request-for-quote platforms. The planned change would let eligible investors buy and sell the securities after issuance while keeping trading within the current regulated market structure.
SEBI said secondary-market sellers could receive digital-rupee funds immediately, compared with a previous settlement period of two to three days. The regulator has not announced when this trading phase will begin.
Retail participation is planned for a subsequent stage. Individual investors would use existing demat accounts, though they would need activated Demat 2.0 access and a compatible digital rupee wallet.
The RBI has previously used its wholesale digital rupee for controlled financial-market transactions. In related coverage, U.S. Bank tested a proprietary digital dollar on Stellar, but that pilot involved a bank-issued token rather than central bank currency.
India’s system remains separate from public cryptocurrency markets. Private tokens do not settle the bond transactions, and the securities do not trade through decentralized exchanges.
SEBI said experience collected during the issuance, secondary-trading and retail phases will guide any expansion. It has not committed to a full rollout or published deadlines for deciding whether Demat 2.0 will move beyond pilot status.
