India’s Securities and Exchange Board (SEBI) and the Reserve Bank of India (RBI) have initiated a tokenized corporate bond pilot, resulting in three companies issuing a combined 10.25 billion rupees ($107 million). The framework utilizes Demat 2.0, allowing bonds to be issued and held as digital tokens on distributed ledgers owned by statutory depositories, while connecting to the RBI’s wholesale central bank digital currency through its Unified Market Interface.
The initial issuances included public-sector lender REC raising 5 billion rupees from 18 investors, engineering conglomerate Larsen & Toubro securing 5 billion rupees from four investors, and non-bank lender IIFL issuing 250 million rupees to one investor. SEBI stated that this infrastructure enables same-day fund receipt for issuers and atomic settlement, removing delays between money and bond movements. Investors retain existing Demat accounts but must enable Demat 2.0 and maintain a wholesale CBDC wallet for settlement.
This development signifies a structural shift in India's fixed-income market by integrating blockchain technology directly into regulated financial infrastructure rather than operating in parallel silos. By combining native distributed ledger issuance with statutory depository records and CBDC settlement, SEBI claims to have created a unique model that preserves legal status and investor protections while enhancing operational efficiency through smart contract automation.
The pilot serves as a critical test case for institutional adoption of tokenization within traditional regulatory frameworks. While the current phase focuses on primary issuance among select participants, the planned introduction of secondary trading and retail access will determine whether this infrastructure can scale effectively. Observers should monitor how the transition from atomic settlement in primary markets to broader liquidity mechanisms impacts market structure and compliance standards.
