India Tests Tokenized Corporate Bonds With Digital Rupee in $620B Market Pilot
India’s corporate bond market, worth roughly $620 billion, has begun its first live test of blockchain-based issuance. On September 11, 2026, the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) launched Demat 2.0, a pilot that issues corporate bonds as digital tokens on a distributed ledger and settles them in the RBI’s wholesale digital rupee. Three issuers have already raised a combined ₹1,025 crore, about $116 million, in the opening phase.
REC, the state-owned power lender, and engineering major Larsen & Toubro each issued ₹500 crore, while IIFL Finance raised ₹25 crore. The bonds carry the same coupon rates, maturity terms, and investor rights as conventional debt. What changes is the plumbing: issuance, record-keeping, and settlement now run across a shared ledger rather than a series of separate systems.
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What Demat 2.0 Actually Does
According to SEBI, corporate bonds issued under the pilot are held as digital tokens on a distributed ledger managed by India’s statutory depositories. The ledger connects to the RBI’s wholesale digital rupee through its Unified Market Interface, which enables atomic delivery-versus-payment — the bond and the cash change hands in the same instant.
That single feature addresses one of the more persistent inefficiencies in bond markets: failed settlements. When delivery and payment settle atomically on shared infrastructure, the window in which one leg can complete without the other narrows to zero. For a market clearing transactions worth billions daily, even a small reduction in settlement failures translates into real cost savings for issuers and investors alike.
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The pilot does not introduce a parallel market. It plugs into India’s existing financial architecture, including depositories NSDL and CDSL, exchanges NSE and BSE, and banks such as HDFC Bank and ICICI Bank. Tokens sit in the same Demat accounts investors already use, provided Demat 2.0 is enabled through their depository. Settlement participants also need a wholesale CBDC wallet with a participating bank.
India Positions Itself Ahead of Larger Debt Markets
SEBI’s announcement claims a first for India: no other jurisdiction has combined natively issued distributed-ledger bonds, statutory depository ownership records, and CBDC settlement inside its existing regulated market infrastructure.
That distinction matters because most tokenization efforts elsewhere have followed one of two paths. Some projects tokenize assets that already exist, wrapping conventional bonds in blockchain representation while leaving the underlying rails untouched. Others have built standalone digital bond platforms outside regulated depository systems. India’s approach folds the new technology into the same legal and custodial framework that governs its $620 billion corporate bond market, reportedly the third-largest in Asia, according to SEBI.
The RBI has been piloting the digital rupee in both retail and wholesale forms since 2022. What is new in Demat 2.0 is the pairing: tokenized instruments on one ledger, programmable central bank money on the other, settled simultaneously.
What Comes After the $116 Million Trial
Phase one covers issuance and primary settlement. SEBI has signaled that the next stage will test secondary trading through existing request-for-quote platforms, where dealers quote prices to buyers instead of orders executing on a central limit order book — the standard mechanism for corporate bond trading in India and most other markets.
Retail access may follow later, but no timeline has been announced. For now, the participating institutions remain large, regulated borrowers and institutional investors, which is typical for any capital markets infrastructure overhaul.
Several questions remain unresolved. Whether the tokenized structure lowers issuance costs enough to justify the migration, whether secondary liquidity improves or merely shifts venues, and whether the legal treatment of digital tokens holds up in disputes are all open. The $116 million pilot is what regulators get to observe before deciding whether to scale.
The bigger context is a global push toward market infrastructure modernization. The European Investment Bank, the Bank for International Settlements, and several Asian central banks have run similar experiments in recent years — each attempting to answer the same underlying question: what does regulated capital markets infrastructure look like when settlement is instantaneous and the record of ownership is shared rather than reconciled. India’s pilot is now among the larger live tests with a functioning $620 billion market attached to it. Participants in the current phase will be watching closely whether the operational gains justify extending it.
