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Points of Focus
- SEBI and RBI tokenized $107 million in corporate bonds under Demat 2.0.
- Investors need no new wallet, account, or private key to participate.
- India’s corporate bond market sees only 3.8% monthly secondary turnover.
India’s Securities and Exchange Board (SEBI) and the Reserve Bank of India (RBI) launched Demat 2.0 on Sep. 10, a live pilot that issues corporate bonds as digital tokens settled through India’s wholesale central bank digital currency (CBDC).
India Launches Tokenized Bond Pilot for $620B Corporate Debt Market
India’s securities regulator SEBI and the Reserve Bank of India have launched the Demat 2.0 pilot to test tokenized corporate bonds on distributed ledger technology. The pilot uses the RBI’s wholesale digital… pic.twitter.com/f49C74Wkji
— Wu Blockchain (@WuBlockchain) September 11, 2026
RBI Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey announced the pilot jointly at the Global Fintech Fest in Mumbai. Three issuers, REC Limited, Larsen & Toubro, and IIFL Finance, have already raised a combined ₹1,025 crore (about $107 million) under it.
That combined figure is small compared with the market it is meant to serve, and the pilot’s design choices matter more than its size at this stage.
How SEBI’s tokenized bond pilot actually settles trades
REC Limited issued ₹500 crore on Sep. 7 to 18 investors, Larsen & Toubro raised ₹500 crore on Sep. 9 from four investors, and IIFL Finance added ₹25 crore the same day. Each bond is issued as a native digital token on a private, permissioned distributed ledger (DLT) owned by India’s depositories, carrying the same ISIN, coupon, and legal status as a conventional bond.
Settlement runs through the RBI’s wholesale central bank digital currency, which the RBI has used since launching the wholesale pilot on Nov. 1, 2022, initially for government securities settlement. That pilot has grown slowly: daily e₹ transaction volume was reported around 18,000 as of late 2023, against an RBI target of a million a day, so routing live corporate bond settlement through it gives the digital rupee a new, higher-value use case rather than a repeat of its existing government-securities role.
SEBI’s FAQ describes the bond and cash legs settling atomically, both together or neither at all, which the regulator says removes the interval and the counterparty exposure that exists between a conventional trade and its settlement.
Why investors need no new wallet or private key
Per SEBI’s FAQ, participating in the pilot requires no new demat account and no fresh KYC. A Demat 2.0 account is an extension of an investor’s existing demat account, and the depositories, not the investor, hold and manage the cryptographic private keys.
That is a materially different design than most tokenization pilots elsewhere, which typically still require some new wallet or custody arrangement. SEBI has staged the rollout in three phases: institutional issuance now, secondary-market trading with retail access in Stage II, and broader participation by depository participants and other regulated entities in Stage III, with an interim peer-to-peer transfer mechanism available before Stage II for investors who need to exit early.
The pilot itself runs under SEBI’s regulatory sandbox, meaning any relaxation of standing rules is scoped and time-limited rather than a permanent change to how bonds are regulated.
Small pilot testing India’s biggest bond-market weakness
India’s outstanding corporate bond market stood at roughly ₹53.6 lakh crore (about $627 billion) as of FY25, according to the RBI’s Financial Stability Report, equal to only 15-16% of GDP versus 79% in South Korea and 54% in Malaysia. The same report found average monthly secondary-market turnover at only 3.8% of outstanding value, the exact kind of illiquidity that automated servicing and atomic settlement are meant to address.
At ₹1,025 crore, the pilot represents roughly 0.02% of that outstanding market, a scale suited to a live regulatory-sandbox test rather than a market-wide shift. SEBI has not set a date for Stage II’s retail rollout, the next concrete marker this pilot has yet to hit.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency prices are highly volatile. Always conduct your own research before making investment decisions.
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