India launches Demat 2.0 pilot, tokenizing corporate bonds with instant digital rupee settlement
New CapabilitiesThree issuers raised ₹1,025 crore in phase one; secondary-market trading and retail access come next
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Overview
Updated 55 minutes agoThree Indian companies raised ₹1,025 crore in corporate bonds that exist as digital tokens on a shared ledger, with the cash leg settled instantly in the Reserve Bank of India's digital rupee. India is the first country to issue bonds natively on a distributed ledger while keeping formal ownership records with its statutory depositories.
The pilot, called Demat 2.0, replaces the usual two-to-three-day settlement cycle with atomic settlement: bond and money move together or not at all. But there is no secondary market yet — the bonds are listed on exchanges with no live trading venue — so the mechanism remains untested under real trading pressure.
SEBI chairman Tuhin Kanta Pandey said the next phase brings secondary-market trading, with retail access and other instruments after that. If it scales, tokenized bonds could cut issuance and servicing costs and automate interest payments through smart contracts.
Why it matters
If this pilot scales, corporate bond settlement in India drops from days to instant, simultaneous transfer — eliminating the window where trades can fail.
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People Involved
Organizations Involved
India's securities market regulator, testing next-generation market infrastructure built on distributed ledger technology.
India's central bank, whose digital currency rails complete the cash leg of every Demat 2.0 transaction.
State-owned power sector financier that issued India's first tokenized corporate bond.
India's largest engineering and construction firm, the second Demat 2.0 issuer.
Private Indian financial services group, formerly India Infoline, the smallest Demat 2.0 issuer.
Timeline
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SEBI and RBI launch Demat 2.0 at Global Fintech Fest
Latest AnnouncementRegulators confirmed phase one success with ₹1,025 crore raised. Pandey said secondary trading is next.
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L&T and IIFL issue tokenized bonds
L&T raised ₹500 crore from four investors; IIFL raised ₹25 crore from one.
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REC issues India's first tokenized corporate bond
IssuanceThe state-owned power financier raised ₹500 crore from 18 investors in the first Demat 2.0 issuance.
Historical Context
3 moments from history that rhyme with this story — and how they unfolded.
India's dematerialization rollout (1996–2005)
India began moving stock ownership from physical paper certificates to electronic demat accounts in 1996, creating depositories NSDL and CDSL to hold records. The shift took nearly a decade and required a national campaign because brokers and investors distrusted electronic records.
Trading halts and conversion backlogs as firms switched certificates in batches.
Virtually all Indian securities now exist in demat form, and the two depositories are core national infrastructure.
Demat 2.0 repeats the pattern — same depositories, same accounts, new recording technology, phased rollout — after India's first dematerialization took ten years to complete.
World Bank bond-i (2018)
The World Bank raised A$110 million on a private Ethereum-based ledger, the first bond issued directly on a distributed ledger. It proved issuance could work, but the cash leg settled through traditional banking channels.
Several banks and governments ran similar pilots over the following years.
Most stayed experiments because settlement still relied on conventional rails and legal ambiguity remained.
India's Demat 2.0 goes further by settling the cash leg in central bank digital currency and keeping ownership with statutory depositories, so it runs inside regulated market infrastructure rather than beside it.
US securities industry moves to T+1 settlement (2024)
After the 2021 meme-stock frenzy exposed settlement risk, the US cut the trade settlement cycle from two business days to one. The Securities and Exchange Commission said the shorter window reduced counterparty and liquidity risk.
T+1 shortened the risk window across US equities and corporate bonds.
Regulators continue discussing same-day or instant settlement as the eventual endpoint.
Atomic settlement in Demat 2.0 removes the window entirely — bond and cash move together or not at all — the endpoint of a decades-long drive to shorten settlement cycles.
