India Begins $107.2 Million Tokenized Corporate Bond Pilot

India’s financial authorities have formally launched a pilot market for tokenized corporate bonds using distributed ledger technology, or DLT.

The Block reported on September 11 that the Securities and Exchange Board of India, or SEBI, said three issuers had completed tokenized corporate bond offerings totaling 10.25 billion rupees, or about $107.2 million, through the Demat 2.0 pilot.

REC Ltd. carried out the first issuance. The company raised 5 billion rupees, or about $52.3 million, from 18 investors on September 7. L&T Ltd. raised a similar amount from four investors on September 9, while IIFL raised 250 million rupees, or about $2.6 million, from a single investor the same day.

Demat 2.0 records corporate bonds directly as digital tokens on a distributed ledger operated by a depository. It is linked to the Reserve Bank of India’s wholesale central bank digital currency, enabling bond transfers and cash settlement to occur simultaneously through atomic settlement.

The structure allows multiple authorized institutions to view bond holdings and settlement information in real time on the same ledger. At maturity, the e-rupee, or e₹, is paid directly into investors’ CBDC wallets. SEBI said the setup could shorten processes spanning issuance, settlement and post-trade administration, while reducing operational errors.

The tokenization does not create a new type of bond. Securities included in the pilot use the same international securities identification number, or ISIN, as conventional dematerialized corporate bonds. Coupons, maturities, credit ratings, issuer obligations and investor rights also remain unchanged. SEBI said the approach is closer to recording and settling existing securities on a different infrastructure.

SEBI plans to expand the pilot in three stages. The first stage is testing issuance and settlement functions for institutional investors. It then plans to introduce secondary-market trading before gradually opening access to retail investors.