India’s Demat 2.0 Pilot Raises ₹1,025 Crore Through Tokenized Corporate Bonds

Summary

• SEBI’s Demat 2.0 pilot helped three issuers successfully raise ₹1,025 crore through tokenized corporate bonds involving 23 institutional investors nationwide.
• Atomic settlement links tokenized bonds with wholesale digital rupee payments, reducing transfer risks and accelerating issuer access to their proceeds.
• Tokenized bonds retain conventional investor rights, while later pilot stages will introduce secondary trading and regulated retail market participation.

India’s securities regulator has completed three tokenized corporate bond issuances worth ₹1,025 crore through its Demat 2.0 pilot program. The transactions brought distributed ledger technology into India’s established corporate bond market while preserving existing investor rights.

According to the Securities and Exchange Board of India, three companies participated during the pilot’s institutional issuance phase. REC Limited completed the first transaction on September 7, raising ₹500 crore from 18 institutional investors.

L&T Limited followed on September 9 and secured another ₹500 crore from four investors. IIFL also raised ₹25 crore from one investor through the same infrastructure that day.

Together, the three issuances attracted approximately $107.2 million from 23 investors. Significantly, the pilot tested digital issuance, ownership recording, settlement, and servicing within India’s regulated securities framework.

Demat 2.0 records corporate bonds as native digital tokens on a distributed ledger controlled by India’s depositories. However, tokenization does not introduce a separate asset class or change the legal character of the bonds.

Each tokenized instrument retains its existing International Securities Identification Number. Issuers also preserve the original coupon, maturity, covenants, credit rating, obligations, and investor protections.

Consequently, investors receive the same economic and legal rights available through conventional dematerialized corporate bonds. This structure allows SEBI to test new settlement infrastructure while maintaining familiar regulatory safeguards.

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Tokenized Settlement Connects Bonds With India’s Wholesale Digital Rupee

Demat 2.0 connects with the Reserve Bank of India’s wholesale central bank digital currency through the Unified Market Interface. This connection allows the securities transfer and corresponding cash payment to occur within one coordinated transaction.

Atomic settlement completes both parts together, reducing risks created when securities and funds move through separate systems. Moreover, the mechanism limits situations where one party fulfills its obligation while the corresponding transfer remains incomplete.

Issuers could also receive proceeds on the bidding date through this arrangement. Conventional corporate bond issuances usually require two or three days before issuers access the raised capital.

Besides improving settlement speed, the shared ledger gives authorized institutions access to the same verified bondholder records. That visibility can reduce reconciliation work and discrepancies between records maintained across several organizations.

Bondholders can receive coupon or maturity payments directly into their wholesale digital rupee wallets on scheduled payment dates. Hence, automated servicing could reduce errors while improving coordination among issuers, depositories, investors, and payment institutions.

SEBI Plans Secondary Trading and Retail Access

SEBI structured the Demat 2.0 pilot across three stages under its Regulatory Sandbox. The opening stage concentrates on institutional issuance and tests the infrastructure through regulated primary market transactions.

Later stages will introduce secondary market trading and retail investor participation. Additionally, these phases will examine tokenized bonds across broader trading, settlement, custody, and servicing activities.

India’s pilot integrates distributed ledger technology with existing financial infrastructure under controlled regulatory conditions. It preserves conventional protections while testing faster settlement, shared records, and digital-rupee payments across the corporate debt market.

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