India Launches Tokenized Bond Pilot for $620 Billion Corporate Debt Market

India’s securities regulator SEBI and the Reserve Bank of India have launched the Demat 2.0 pilot to test tokenized corporate bonds using distributed ledger technology, marking another step in the country’s effort to modernize its roughly $620 billion corporate debt market.

The development was reported by @WuBlockchain. Under the pilot, the RBI’s wholesale digital rupee is used for atomic settlement, allowing securities and payments to settle simultaneously on-chain. REC, L&T and IIFL have issued a combined ₹10.25 billion ($116 million) in bonds through the program.

India Tests Tokenized Corporate Bonds

The Demat 2.0 pilot brings tokenized securities and digital settlement infrastructure into India’s corporate bond market. By using distributed ledger technology, the program is designed to test how securities transactions can be processed alongside corresponding payments within the same on-chain settlement process.

The use of the RBI’s wholesale digital rupee is a central component of the pilot. Rather than treating the transfer of securities and the associated payment as separate settlement processes, the structure allows both sides of the transaction to settle simultaneously.

REC, L&T and IIFL have already participated by issuing a combined ₹10.25 billion ($116 million) in bonds under the program. Their involvement provides markets an initial test case for applying tokenization to established corporate debt issuance rather than limiting the technology to experimental digital assets.

Tokenization Targets India’s $620 Billion Debt Market

The pilot forms part of India’s broader effort to modernize a corporate debt market valued at roughly $620 billion. Applying tokenized infrastructure at this scale could have implications for how securities are issued, transferred and settled if the technology proves effective beyond the pilot stage.

For the wider digital-asset industry, the initiative also demonstrates how tokenization is increasingly being tested within regulated financial markets. The focus is not solely on creating digital representations of assets, but also on connecting tokenized securities with regulated digital payment infrastructure.

The immediate significance of Demat 2.0 will depend on the results of the pilot and whether its settlement model can support broader adoption across India’s corporate bond market. The participation of REC, L&T and IIFL provides an early operational test of the model, with the next question being how regulators and financial institutions assess the pilot as India continues developing its digital securities infrastructure.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.