India has launched a pilot program to tokenize its $620 billion corporate bond market using distributed ledger technology and atomic settlement via the RBI's wholesale digital rupee.
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) jointly launched Demat 2.0, which issues corporate bonds as digital tokens on a permissioned ledger operated by depositories NSDL and CDSL. Smart contracts automate settlement, ensuring that bond transfers and rupee payments occur simultaneously and irrevocably.
Three issuers—REC, Larsen & Toubro, and IIFL Finance—have raised 1,025 crore rupees ($107 million) in the pilot phase. The pilot demonstrates technical feasibility for tokenizing capital market instruments at the scale of India's corporate bond market.
Secondary trading mechanisms and retail access are planned for later phases. The permissioned structure enhances regulatory oversight during initial integration but limits decentralization benefits typically associated with blockchain technology. This trade-off reflects a deliberate choice to prioritize settlement certainty and regulatory control over network openness.
