India Begins Tokenizing $620 Billion in Corporate Bonds
SEBI’s Demat 2.0 links tokenized bonds to the RBI’s digital rupee. The pilot is meant to speed up settlement in a market worth more than $620 billion.
Key Takeaways
- India has launched Demat 2.0, a SEBI pilot for tokenizing corporate bonds through blockchain and digital central bank money.
- The first transactions involved REC, Larsen & Toubro, and IIFL Finance, raising ₹500 crore, ₹500 crore, and ₹25 crore respectively.
- The pilot links bonds and digital rupees for simultaneous settlement and could later expand to secondary trading and retail investors.
India has started settling corporate bonds through blockchain technology and digital central bank money. With the Demat 2.0 pilot, regulator SEBI is pushing tokenization further in a market that has been large and important for local financing for years.
Demat 2.0 Goes Live
SEBI launched Demat 2.0 this week, a trial that runs on the electronic accounts Indian investors already use for stocks and bonds. Within this system, corporate bonds can be issued as digital tokens on a distributed ledger managed by regulated market participants.
The first transactions have already been completed. State-owned REC raised ₹500 crore earlier this month, about $56 million (€48.2 million). Larsen & Toubro followed with another ₹500 crore, while IIFL Finance raised ₹25 crore, about $2.8 million (€2.4 million).
The bonds themselves remain traditional, with fixed interest, maturity, and investor rights. The difference is in settlement: the tokenized bond and the digital rupees used for payment can move together instead of running through separate systems.
Settlement Through the Digital Rupee
Demat 2.0 links the tokenized bond ledger to the Reserve Bank of India’s wholesale digital rupee through the Unified Market Interface. That allows the bond and the money for payment to be settled at the same time, which reduces settlement risk for both sides of a transaction.
In a classic settlement, payment and delivery run through separate systems. If one side gets stuck before the other, one party is left exposed to risk. By tying both steps together, India is trying to make that process tighter.
Interest payments and redemptions can also be handled through smart contracts. In later phases of the pilot, secondary trading and eventually access for retail investors are expected.
Why This Matters
For European crypto readers, the big takeaway is that India is not putting tokenization outside the financial system, but bringing it into the existing market structure. The country remains cautious about private crypto, but it is using blockchain and digital central bank money for regulated investment products.
That fits into a broader trend in India, where other sectors too are using blockchain to make financing and verification more efficient. The corporate bond market has grown from about $360 billion (€310 billion) in 2016 to $645 billion (€555 billion) in 2025. At the same time, the market saw its first drop in corporate bond issuance in four years in fiscal year 2025-26, which makes the search for more efficient settlement even more relevant.
