India Pilot Issues $107M Tokenized Bonds Via New Tokenized Bond Pilot

India is moving tokenized corporate bonds from theory to execution. SEBI, the Securities and Exchange Board of India, and the Reserve Bank of India (RBI) have launched a pilot that issues and settles selected corporate bonds as digital tokens within regulated market infrastructure.

In the program, three issuers have completed initial sales totaling 10.25 billion rupees (about $107 million). SEBI said the first deals test how tokenized bonds can be issued, held, and settled on a distributed ledger while payments are linked to the RBI’s wholesale central bank digital currency (CBDC).

Key takeaways

• SEBI’s “Demat 2.0” pilot supports tokenized corporate bond issuance and holding on a distributed ledger managed by India’s statutory depositories.


• Total pilot issuance so far is 10.25 billion rupees across three companies, including two 5 billion rupee offerings.


• Settlement is designed to be faster: SEBI says atomic settlement reduces the gap between moving funds and bonds.


• Investors may use existing Demat accounts, but they must enable Demat 2.0 and maintain a wholesale CBDC wallet for settlement through participating banks.


• SEBI claims tokenization preserves legal protections, including bond repayment obligations and investor safeguards.

Demat 2.0 links tokenized bonds to RBI’s wholesale CBDC

SEBI said on Thursday that Demat 2.0 enables corporate bonds to be issued and held as digital tokens on a distributed ledger operated by statutory depositories. The system is designed to connect with the RBI’s wholesale CBDC using the central bank’s Unified Market Interface.

SEBI also described two core technical changes aimed at improving operational speed:

• Atomic settlement, intended to remove the delay between the movement of money and the movement of bonds.


• Smart contracts, which SEBI said can automate periodic interest and redemption workflows.

The practical implication for market participants is straightforward: if settlement timelines are shortened and payment and delivery are synchronized, issuers may reduce execution friction and investors may experience cleaner post-trade mechanics compared with longer traditional cycles.

Initial issuers and amounts complete the first phase

SEBI’s pilot began with three issuances across different company types. The first issuance was led by REC, a public-sector lender. On Monday, REC raised 5 billion rupees from 18 investors.

Next, Larsen & Toubro (L&T) issued another 5 billion rupees, raised from four investors, on Wednesday.

On the same day, IIFL, a non-bank lender, issued 250 million rupees in bonds to a single investor.

SEBI said the infrastructure allows issuers to receive funds on the day of bidding, rather than waiting two to three days later. That shift matters because faster funding cycles can improve liquidity planning for issuers and potentially reduce the operational window that intermediaries manage during issuance.

Pilot built on a smaller test plan reported earlier

The rollout represents an expansion beyond an earlier plan described in reporting from Reuters. In August, Reuters said India planned to test tokenized corporate bonds through an REC issuance of less than 5 billion rupees with selected investors. According to SEBI’s latest update, the pilot ultimately grew beyond that initial scope: SEBI’s launch includes two additional issuers, bringing the total issuance to more than double what was originally expected from REC.

SEBI also indicated that the pilot is not the end of the story. SEBI said later phases will explore:

• Secondary trading using existing request-for-quote platforms.


• Access for retail investors, with the pilot’s experience used to guide any broader rollout.

This staging approach is important for readers to understand. Early tokenized bond pilots often limit participants and trading complexity to reduce operational risk. Here, SEBI’s roadmap suggests the regulatory focus may shift from primary issuance mechanics—how bonds are minted and settled—to market liquidity questions such as how tokenized bonds behave in trading environments and how retail access is operationally handled.

How investors participate without opening a separate account

SEBI said investors can hold the tokenized bonds in their existing Demat accounts. That reduces the friction typically associated with onboarding new digital instruments—especially in markets where Demat participation is already common.

However, participation is not entirely plug-and-play. SEBI said investors must:

• Enable Demat 2.0 through their depository.


• Maintain a wholesale CBDC wallet with a participating bank to settle payments.

SEBI also emphasized that the tokenization layer does not alter the bonds’ underlying legal framework. The regulator said tokenization does not change the legal status of the bonds, the repayment obligations, or investor protections.

For the market, that clarification matters: investors may be more willing to participate in tokenized instruments when the regulator ties new settlement mechanics to the same legal rights they already understand in traditional bond markets.

What to watch next is whether the pilot’s promised settlement acceleration translates into measurable operational benefits as the program moves toward secondary trading and wider access. SEBI’s planned next steps will likely be the real stress test—determining whether tokenized issuance can scale from controlled primary deals to active market trading without creating new settlement, liquidity, or compliance bottlenecks.

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