India Tests Blockchain-Based Corporate Bonds With $107M Pilot
India is testing a new way to issue and settle corporate bonds by turning them into blockchain tokens, marking an early step toward modernizing the country’s $620 billion corporate bond market.
The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) introduced the pilot, known as “Demat 2.0,” at the Global Fintech Fest last week. SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra presented the initiative as part of India’s broader push to bring distributed-ledger technology into financial markets.
Under the framework, corporate bonds are created as native digital tokens on a private, permissioned blockchain operated by India’s two statutory securities depositories, NSDL and CDSL.
Three companies have already used the system to raise a combined 1,025 crore rupees, worth approximately $107 million. State-owned lender REC launched the pilot on Sept. 7 with a 500 crore rupee bond purchased by 18 investors. Larsen & Toubro followed with another 500 crore rupee issuance, while non-bank lender IIFL Finance raised 25 crore rupees through the framework.
The pilot connects the tokenized bond ledger to the RBI’s wholesale central bank digital currency, the digital rupee, through a Unified Market Interface. This allows for atomic settlement, meaning the bond and payment are transferred at the same time.
The setup could help issuers receive funds on the day of bidding instead of waiting several days for settlement. Smart contracts may also automate recurring tasks, including interest payments and bond redemptions, reducing the need for manual processing.
SEBI said the move to tokenization does not change the legal nature of the bonds. Their credit ratings, debenture trustees, listing requirements and investor protections remain in place. The regulator also stressed that the system is designed to avoid fragmenting the existing corporate bond market.
Investors can hold the tokenized securities through their existing Demat accounts, without completing new know-your-customer checks. Future stages of the project are expected to introduce secondary-market trading, followed by potential access for retail investors.
The initiative highlights India’s approach to blockchain and digital assets. While the country has maintained a cautious position toward privately issued cryptocurrencies, it has continued developing blockchain-based financial infrastructure under government and central bank oversight.
The digital rupee remains central to that strategy, and the Demat 2.0 pilot could offer a model for bringing tokenization into mainstream capital markets while keeping existing investor protections intact.