India just quietly executed one of the largest government-backed tokenized bond pilots anywhere in the world. Three corporate issuers raised a combined ₹1,025 crore, roughly $122 million, in tokenized bonds settled through the Reserve Bank of India’s wholesale central bank digital currency. The whole thing took days, not weeks.
The pilot, dubbed “Demat 2.0,” was formally announced on September 10, 2026, at the Global Fintech Fest in Mumbai by RBI Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey. It represents India’s most ambitious attempt yet to modernize a corporate bond market valued at ₹59 lakh crore, a figure that translates to roughly $700 billion.
How the pilot actually worked
Rural Electrification Corporation (REC) led the charge, raising ₹500 crore from 18 investors on September 7. Two days later, engineering giant Larsen & Toubro matched that figure with ₹500 crore from four investors, while IIFL Finance added ₹25 crore from a single investor.
The bonds were issued as digital tokens on a permissioned distributed ledger managed by India’s two statutory depositories, NSDL and CDSL.
Settlement ran through the RBI’s wholesale CBDC, known as the e₹-W, using what’s called an atomic delivery-versus-payment model. In plain terms: the digital bond and the digital payment change hands simultaneously, in one indivisible transaction. No waiting period, no counterparty risk from one side delivering before the other.
Old bonds, new rails
One of the more notable design choices: SEBI ensured that these tokenized bonds carry identical legal character and regulatory treatment as conventional demat bonds. They aren’t a new asset class. They don’t operate under a separate regulatory framework. Investor rights, compliance obligations, and legal protections remain unchanged.
A three-phase roadmap
SEBI has outlined a phased approach. The current first phase focused exclusively on institutional issuance, the primary market transactions that just completed. Phase two will introduce secondary market trading for these tokenized bonds. The third phase is the most ambitious: expanding access to retail investors and potentially extending the framework to other financial instruments beyond corporate bonds.
The use of a permissioned DLT rather than a public blockchain keeps the system within the regulatory perimeter. NSDL and CDSL, as the node operators, maintain institutional control over the ledger.
The integration of wholesale CBDC settlement is particularly significant. By settling in central bank money on-chain, India eliminates the credit risk that comes with private settlement tokens. $122 million in tokenized issuance, settled atomically in sovereign digital currency, within days of launch, is one of the largest CBDC-settled tokenization exercises completed by any country to date.