India’s financial authorities have opened a pilot market for tokenized corporate bonds under the Demat 2.0 initiative, marking an early live test of distributed ledger technology in the country’s bond infrastructure.
The first transactions totaled 10.25 billion rupees, or about $107.2 million, across three issuers. The system is connected to the Reserve Bank of India’s wholesale central bank digital currency, allowing bond transfers and cash settlement to take place at the same time through atomic settlement.
First issuances completed
According to the pilot details, REC Ltd. issued 5 billion rupees of tokenized corporate bonds to 18 investors. L&T Ltd. also raised 5 billion rupees, in that case from four investors. IIFL completed a smaller 250 million rupee issuance that went to a single investor.
Together, those three offerings make up the first confirmed activity under the newly launched pilot market. The combined amount provides an initial operating test for the tokenized structure with multiple issuers and different investor counts.
How the Demat 2.0 model works
Under Demat 2.0, the bonds are represented as digital tokens on a distributed ledger run by a depository. The setup is designed so that approved institutions can view holdings and settlement information in real time.
The platform is linked to the Reserve Bank of India’s wholesale e-rupee system. That link enables atomic settlement, meaning the bond transfer and the cash payment are completed simultaneously rather than as separate steps.
At maturity, repayment is made in e-rupee directly into investors’ wallets, extending the digital workflow beyond issuance day and settlement into the life cycle of the bond itself.
What regulators expect from the pilot
SEBI expects the framework to reduce the time required for issuance, settlement, and post-trade processes. The authorities also see the ledger-based structure as a way to lower operational errors by keeping records and transfers within a single coordinated system.
The pilot is being presented as an infrastructure test rather than a full market rollout. Its early focus is on proving whether tokenized records and CBDC-linked settlement can work efficiently for corporate bond issuance under controlled conditions.
Next stages for the market test
The expansion plan is set out in three phases. The first stage covers issuance and settlement for institutional investors, which is the stage now under way.
After that, the pilot is expected to move into secondary-market trading. A later stage would then open access to retail investors, broadening participation beyond the initial institutional environment.
For now, the confirmed next step is continued testing within the pilot structure, with future phases depending on how the initial issuance and settlement process performs.
Source: en.bloomingbit.io