India’s markets regulator SEBI has launched a pilot for ‘Demat 2.0’, using distributed ledger technology to tokenise corporate bonds, aiming to modernise the market infrastructure and facilitate seamless trade and settlement.
India’s markets regulator has begun testing a new digital system for corporate bonds, as the Securities and Exchange Board of India moves to trial what it calls “Demat 2.0”. According to reports in LiveMint and Business Standard, the pilot uses distributed ledger technology to issue, hold, trade and settle corporate bonds as digital tokens, while leaving the legal character of the securities unchanged. The experiment was unveiled at the Global Fintech Fest in Mumbai, where Reserve Bank of India Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey took part.
The key aim is to modernise the back end of bond markets without altering investors’ rights or issuers’ obligations. Business Standard said the system is run on a private, permissioned ledger operated by depositories, and that existing know-your-customer details can be reused, so investors do not need to open a separate demat account. Regulatory checks, including credit ratings, debenture trustees, listings and disclosure requirements, continue to apply in full.
The pilot is also linked to the Reserve Bank of India’s wholesale central bank digital currency, e₹, through the Unified Market Interface. That connection allows what the reports describe as atomic settlement, meaning the bond and the money can move at the same time. LiveMint, Moneycontrol and Business Standard all said the first tokenised issues have already taken place, including ₹500 crore each from REC and L&T, plus ₹25 crore from IIFL, taking total pilot issuances to ₹1,025 crore.
The rollout is expected to proceed in stages. The first phase focuses on issuance to institutional investors, with later phases set to extend secondary-market trading and retail participation before the framework is widened to other regulated entities and financial instruments. For India’s bond market, the test matters because it could reduce settlement friction, improve transparency and lay the groundwork for broader tokenisation if the pilot proves reliable at scale.
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