India Launches $620 Billion Corporate Bond Tokenization Pilot with Digital Rupee Settlement

ChainCatcher report: This week, India’s Securities and Exchange Board of India (SEBI) launched the Demat 2 pilot, issuing corporate bonds as digital tokens on a distributed ledger operated by regulated market institutions, with settlement completed via the Reserve Bank of India’s wholesale digital rupee. The Indian corporate bond market is valued at approximately $620 billion. The state-owned power lending agency REC raised ₹50 billion (approximately $560 million) through the system, engineering and construction giant Larsen & Toubro refinanced ₹50 billion, and non-banking lender IIFL Finance raised ₹2.5 billion (approximately $28 million), totaling approximately ₹102.5 billion. The bonds retain fixed interest rates, maturity dates, and investor rights, but tokenized bonds can be settled synchronously with the digital rupees used for purchase, reducing transaction risk. Future phases will introduce smart contracts to handle corporate actions such as coupon payments and redemptions, with plans to open secondary market trading and eventually extend access to retail investors. India maintains a cautious stance toward private cryptocurrencies; this pilot represents an effort to integrate tokenization into its already regulated financial system.