India’s securities regulator and central bank have officially launched Demat 2.0, a new market infrastructure pilot that records tokenized corporate bonds on distributed ledgers and settles payments using the Reserve Bank of India’s wholesale digital rupee. SEBI Chairman Tuhin Kanta Pandey and RBI Governor Sanjay Malhotra announced the initiative at Global Fintech Fest in Mumbai on September 10.
The pilot has already processed three corporate bond issuances totaling ₹1,025 crore, approximately $116 million. State-owned REC became India’s first tokenized corporate bond issuer on September 7, raising ₹500 crore. Larsen & Toubro followed with another ₹500 crore on September 9, becoming the first private-sector corporate issuer, while IIFL issued ₹25 crore.
Bond and Digital Rupee Move Simultaneously
Demat 2.0 changes the technology underneath bond ownership and settlement without creating a new class of security. Corporate bonds are represented on a permissioned distributed ledger maintained by India’s depositories, while the payment side connects to the RBI’s wholesale central bank digital currency through its Unified Market Interface. That enables atomic delivery-versus-payment.
Instead of securities moving through one system and cash subsequently being reconciled through another, the bond and digital rupees can transfer simultaneously. Either both sides of the transaction settle or neither does. SEBI says this can reduce settlement risk, reconciliation and operational complexity.
It also allows smart contracts to automate processes that currently require coordination between issuers, registrars, depositories and banks. Interest and redemption payments can ultimately be triggered automatically, with digital rupees credited to bondholders’ CBDC wallets on the relevant payment date.
REC demonstrated the potential speed during India’s first issuance. Its ₹500 crore bond completed pay-in, allotment and listing on the same day after attracting ₹796 crore of bids. Importantly, tokenization does not alter investors’ legal rights. Credit ratings, disclosures, debenture trustees, listing requirements and issuer obligations continue to apply under the existing corporate bond framework.
Demat 2.0 Could Expand Beyond Bonds
The name deliberately recalls India’s original dematerialization revolution. Demat 1.0, introduced in the 1990s, replaced physical share certificates with electronic ownership records. Demat 2.0 attempts to move the infrastructure another step forward by combining tokenized securities, programmable settlement and central-bank digital money.
Investors will not need entirely separate conventional securities accounts. SEBI says the existing depository and demat framework remains in place, with the new technology operating underneath it. The initial phase is restricted to institutional participants.
SEBI’s next phase will test secondary-market transfers, allowing tokenized bonds to be bought and sold after issuance. Retail participation is expected later. The regulator is also considering eventually extending the architecture beyond corporate debt to other financial instruments. That could make Demat 2.0 considerably more important than the ₹1,025 crore already issued.
India already operates one of the world’s largest digital financial infrastructures, but securities ownership and money settlement still involve separate systems and intermediaries. Demat 2.0 tests whether distributed ledgers and central-bank digital currency can collapse those processes into a synchronized transaction without abandoning regulated market infrastructure.
The result is notably different from crypto-native tokenization. India is not moving corporate bonds onto a permissionless blockchain or settling them with private stablecoins. It is combining regulated tokenized securities with money issued directly by the RBI.
If the pilot progresses into secondary trading and additional asset classes, Demat 2.0 could become one of the clearest large-market tests yet of what happens when blockchain technology is integrated directly into a country’s conventional capital-market infrastructure.