India Launches $107M Tokenized Bond Pilot Linked to RBI CBDC

India has put 10.25 billion rupees ($107 million) of corporate debt onto its new tokenisation infrastructure, with three companies completing issuances as securities regulators and the central bank test a model that pairs distributed-ledger bonds with wholesale central bank digital currency.

The pilot, called Demat 2.0, is being run by the Securities and Exchange Board of India and the Reserve Bank of India. SEBI disclosed details of the initiative on Thursday.

REC, a state-owned lender, was the first to use the framework, raising 5 billion rupees from 18 investors in a Monday transaction. Two additional deals followed on Wednesday: Larsen & Toubro, the engineering group, raised 5 billion rupees from four investors, while IIFL, a non-bank financial company, sold 250 million rupees of bonds to one investor.

The scale of the first phase exceeds what had been reported in August. Reuters had said at the time that the planned test would involve selected investors and an REC offering valued at under 5 billion rupees. With L&T and IIFL also participating, the combined issuance is more than double the amount initially anticipated for REC.

More primary issuances are still being conducted under this opening stage, according to SEBI. Plans for subsequent phases include bringing the securities onto existing request-for-quote venues for secondary transactions and eventually allowing retail participation. SEBI said lessons from the trial would help determine how broadly to deploy the framework.

Notably, participation does not require investors to establish another securities account or repeat the Know-Your-Customer process. Tokenised bonds can be accommodated within an investor’s current Demat account. For transactions under the pilot, however, Demat 2.0 requires activation with the relevant depository, while the cash side requires a wholesale CBDC wallet maintained with a participating bank.

Demat 2.0 changes how the securities are represented and settled. Corporate bonds are generated as digital tokens on a distributed ledger operated by India’s statutory depositories. The payment side is connected to the RBI’s wholesale CBDC through the central bank’s Unified Market Interface.

That setup supports atomic settlement, which removes the time lag between money and securities transfers, SEBI said. It also shortens the funding timetable for issuers: proceeds can arrive on the bidding day instead of two to three days afterward. Smart contracts can automate interest distributions and bond redemptions.

The move to tokenisation does not modify the bonds’ legal standing, repayment responsibilities or protections available to investors, according to the regulator.

SEBI said the arrangement makes India the first country where corporate bonds originate natively on a distributed ledger, statutory depositories retain the ownership records, and CBDCs handle settlement, all within the existing regulated market infrastructure.