TL;DR:
- India launched Demat 2.0 to issue tokenized corporate bonds and settle payments using the Reserve Bank of India’s wholesale digital rupee.
- REC, Larsen & Toubro and IIFL Finance have already raised a combined ₹1,025 crore while preserving conventional interest, maturities and investor rights.
- Future phases may add smart-contract corporate actions, secondary trading and retail access, while keeping banks, depositories and regulated institutions central to the tokenized market structure in India.
India has begun testing blockchain settlement for corporate bonds through Demat 2.0, a pilot launched by the Securities and Exchange Board of India. The program allows bonds to be issued as digital tokens on a distributed ledger operated by regulated market institutions, while payments settle through the Reserve Bank of India’s wholesale digital rupee. The crucial shift is that India is moving tokenization directly into its existing financial infrastructure rather than building a parallel crypto market. The country’s corporate bond market is worth about $620 billion, giving the pilot unusually large potential scope.
Three issuers have already raised a combined ₹1,025 crore through the system. State-owned power-sector lender REC raised ₹500 crore, about $56 million, followed by another ₹500 crore from engineering and construction group Larsen & Toubro. IIFL Finance added ₹25 crore, approximately $2.8 million. The bonds remain conventional in their economics even though their issuance and settlement infrastructure has changed. Interest rates, maturity dates and investor rights remain intact, while the blockchain layer changes how ownership and payment move between regulated participants.
Digital Rupee Settlement Links Cash And Securities
Demat 2.0 connects the tokenized bond ledger with the Reserve Bank of India’s wholesale digital rupee through the Unified Market Interface. That structure allows the bond and the money used to purchase it to move together instead of passing through separate settlement systems. Linking both sides of the transaction is designed to reduce settlement risk by preventing one leg from completing without the other. In conventional market infrastructure, payment and delivery can be coordinated across different systems, potentially leaving one side exposed if the matching leg fails before completion.
The pilot could also extend beyond primary issuance. Smart contracts may eventually handle corporate actions such as interest payments and redemptions, while later phases are expected to introduce secondary-market trading and ultimately broaden access to retail investors. India’s approach suggests tokenization is being treated as an upgrade to regulated market plumbing rather than a replacement for regulated finance. That distinction is particularly notable because the country has remained cautious toward private cryptocurrencies. Instead, banks, depositories, regulated market institutions and central-bank money sit at the center of the model, keeping control and settlement within the existing financial system. The trial therefore tests whether blockchain can improve efficiency without changing the legal character of the securities being issued today.
