SEBI Launches Demat 2.0 Pilot for Tokenised Corporate Bonds With Digital Rupee Settlement
India's Demat 2.0 pilot completed ₹1,025 crore of tokenised bond issuance with settlement against the RBI's wholesale digital rupee.
India's Securities and Exchange Board has launched Demat 2.0, a pilot for tokenised corporate bonds that combines distributed-ledger securities records with settlement in the Reserve Bank of India's wholesale digital rupee.
SEBI announced the project on September 10 after three issuers completed tokenised bond transactions totalling ₹1,025 crore. REC raised ₹500 crore from 18 investors on September 7, Larsen & Toubro raised ₹500 crore from four investors on September 9, and IIFL raised ₹25 crore from one investor on the same day. This is a regulated pilot with real issuances, not the tokenisation of India's entire corporate-bond market. SEBI.
The security and the cash move together
Demat 2.0 records corporate bonds as digital tokens on distributed-ledger infrastructure maintained by India's depositories and market infrastructure institutions.
The settlement side connects to the RBI's wholesale central bank digital currency through the Unified Market Interface. That makes atomic delivery-versus-payment possible: the bond and the money can move as one coordinated transaction rather than leaving one leg complete while the other is still pending.
That is more consequential than simply putting a bond certificate on a blockchain. Institutional tokenisation changes market infrastructure when the asset, cash and post-trade processes can interact inside the same controlled workflow.
SEBI also says smart contracts can automate servicing such as interest and redemption payments, with digital rupees delivered to eligible bondholders' CBDC wallets on the relevant date.
The legal bond has not changed
SEBI has been explicit that tokenisation does not create a new asset class. The issuer's repayment obligation and the investor's rights remain those of the underlying corporate bond, while existing requirements around ratings, trustees, listing and disclosure continue to apply.
That distinction prevents the technology from being mistaken for a different security. Demat 2.0 changes the recordkeeping and settlement infrastructure, not the economic promise the issuer makes to the bondholder.
It also means the early success of the pilot should not be described as a deregulated blockchain market. The depositories remain central to the ownership record and the wholesale e-rupee remains central-bank money.
Phase one is issuance, not a complete secondary market
The first phase has focused on primary issuance. SEBI has said later phases will extend the system into secondary-market trading and eventually wider investor participation.
That sequencing matters. A bond can be issued successfully on new infrastructure without proving that it will trade efficiently after issuance. Liquidity, price discovery, transfer controls and integration with existing request-for-quote systems will determine whether Demat 2.0 improves the broader market rather than only shortening the issuance workflow.
The pilot's institutional focus also means retail access should not be inferred from the September transactions.
India is testing tokenised assets against tokenised central-bank money
Many institutional blockchain pilots have digitised only one side of a transaction. A tokenised security may still settle through conventional cash rails, or a digital currency may exist without a meaningful capital-market asset to exchange against it.
Demat 2.0 tests both sides together. That makes it a market-structure experiment rather than a simple asset-tokenisation announcement.
The important measurement now is operational: settlement time, failure handling, reconciliation, liquidity and whether secondary trading can occur without fragmenting the existing bond market.
What happens next
SEBI has identified secondary-market trading as the next phase. That will be the stronger test of the infrastructure because it requires bonds to move between investors after issuance rather than simply from issuer to initial buyer.
If that stage works while preserving legal rights, depository records and central-bank-money settlement, Demat 2.0 could provide a model for tokenisation that changes the technology beneath regulated securities without asking investors to leave the regulated market structure around them.