India Launches Pilot for Tokenized Corporate Bonds in 620 Billion Dollar Market

India has initiated a pilot program to issue and settle corporate bonds as blockchain tokens, integrating distributed-ledger technology into its 620 billion dollar market using the digital rupee. The Securities and Exchange Board of India (SEBI) introduced the program, named "Demat 2.0," in collaboration with the Reserve Bank of India (RBI) at the Global Fintech Fest. The system allows corporate bonds to be issued as native digital tokens on a private, permissioned ledger managed by India's statutory depositories, NSDL and CDSL. Three companies have utilized this framework, raising a total of 1025 crore rupees, approximately 107 million dollars. REC was the first to issue a tokenized corporate bond on Sept. 7, raising 500 crore rupees, followed by Larsen & Toubro and IIFL Finance. The system connects the token ledger to the RBI's wholesale digital rupee via a Unified Market Interface, facilitating atomic settlement, where the bond and payment are exchanged simultaneously. This enables issuers to receive proceeds on the bidding day, while smart contracts can automate interest payments and redemptions. SEBI confirmed that the bonds remain legally unchanged, maintaining credit ratings and investor protections, and stated that the market will not be fragmented. Investors can hold tokens in existing Demat accounts without additional KYC checks. Future phases will introduce secondary trading and retail access.

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