What Is Demat 2.0? Everything You Need To Know About India’s Tokenised Bond Pilot

The Securities and Exchange Board of India (Sebi) announced the launch of "Demat 2.0", a pilot project for the tokenisation of corporate bonds on September 11. The joint announcement was made by Reserve Bank of India (RBI) Governor Sanjay Malhotra and Sebi Chairman Tuhin Kanta Pandey at the Global Fintech Fest in Mumbai.

What Is Corporate Bond Tokenisation?

Corporate bonds are debt instruments through which companies raise capital from investors for a fixed tenure. The investors on the other hand get interest payouts and a principal repayment at maturity. Amid the rising adoption of technology in the capital markets, corporate bonds are being converted into digital tokens which exist on a secure, distributed ledger as opposed to being traded through centralised electronic registries and multi-step clearing operations. Corporate bond tokenisation is expected to allow the debt securities to be issued on a digital ledger, streamlining the lifecycle of the bond from issuance to settlement.

What Is Demat 2.0?

According to Sebi’s release, Demat 2.0 is a market infrastructure created for issuing, holding, trading, and settling corporate debt. Under the new framework, each bond is minted as a digital token on a distributed ledger maintained by domestic depositories. The regulator highlighted how the new infrastructure leverages shared ledger systems.

"The bond is created as a digital token on a distributed ledger a shared electronic record maintained simultaneously by market infrastructure institutions using Distributed Ledger Technology (DLT)," Sebi said.

Notably, the new mechanism integrates directly with the RBI’s wholesale Central Bank Digital Currency (CBDC), known as e-rupee to make transactions instantaneous. These transactions take place through the RBI's Unified Market Interface. This in turn eliminates counterparty settlement risk.

Additionally, Demat 2.0 automates corporate actions and asset servicing using smart contracts. In the existing framework, issuers and registrars have to pull records from depositories, calculate individual dues, and manually route payouts across banking channels. However,  under Demat 2.0, interest payouts and redemptions are triggered by code and credited to bondholders' CBDC wallets on the due date.

"Funds received by the issuer on same day as bidding which generally used to take 2-3 days after bidding," Sebi said.

Secondary market investors also receive proceeds instantly upon trade execution instead of waiting for the completion of standard settlement cycles. This in turn frees up liquidity for investors. Sebi highlighted that despite the launch of the new framework the legal protections for tokenised corporate bonds remain identical to conventional demat bonds.

Corporate Bonds In The India Context

Globally, several jurisdictions have tested bond tokenisation pilots, including Project Helvetia III in Switzerland, Project Evergreen in Hong Kong, as well as institutional experiments by global financial entities. However, most overseas initiatives have been isolated issues on separate, fragmented platforms. The regulator pointed out what sets India's approach apart on the global stage.

"India is the first country in which corporate bonds have been issued natively on a distributed ledger, with the record of ownership held by a country's statutory depositories and the funds leg settled in central bank digital currency, within the existing regulated market infrastructure," Sebi said.

The pilot has already recorded strong market participation, with three companies issuing tokenised bonds aggregating Rs 1,025 crore. REC became the first issuer on September 7, 2026, raising Rs 500 crore from 18 investors. Infrastructure major L&T Limited followed on September 9, 2026, raising Rs 500 crore from four investors, while private lender IIFL raised Rs 25 crore from one investor on the same date.

How Can Investors Invest In Corporate Bonds Under Demat 2.0?

Investors can participate in tokenised corporate bond issues without a separate onboarding mechanism. Under Demat 2.0, the tokenised bonds reside in the investor's current demat account. However, to participate, investors need to enable Demat 2.0 features through their registered depository and maintain an active wholesale CBDC wallet with a participating bank to settle transactions. While the initial phase is focused on institutional issuances, the regulator confirmed that subsequent phases of the pilot will expand trading and open direct access to retail investors.