India Launches Demat 2.0 Pilot for Tokenized Corporate Bonds
India’s SEBI regulator has launched a limited pilot in which corporate bonds are issued as digital tokens and settled through the wholesale CBDC e₹.
India Demat 2.0 has entered the pilot phase for tokenized corporate bonds. On September 10, 2026, India’s SEBI regulator announced a project intended to test the issuance, holding, trading and settlement of these instruments on digital infrastructure. However, this is not the introduction of tokenization across India’s entire bond market, nor is it a new type of investment asset.
In the first stage, the system is intended for institutional participants. According to Indian media, the pilot began with three issuances totaling approximately 10.25 billion rupees. REC Limited confirmed that it completed its pilot issuance in SEBI’s regulatory sandbox.
India Demat 2.0 Uses a Permissioned DLT Network
In the pilot, the bond is issued as a native digital token on a private permissioned DLT network operated by depositories. The model is therefore not based on an open public blockchain or ordinary cryptocurrency trading.
SEBI also states that tokenization does not change the legal nature of the bond or investors’ rights. The depository remains the legal record of ownership. The digital token is intended to serve as a form of recordkeeping and management for an existing security within regulated market infrastructure.
An important part of the design is the link between the securities and monetary sides of the transaction. Settlement is intended to use the wholesale central bank digital currency e₹. The operation is to be configured so that the transfer of the bond and the payment take place atomically, as a single mutually conditional operation.
A Test for Settling Bond Trades
The pilot is a regulated test of linking tokenized securities with the central bank digital currency e₹. In practice, SEBI wants to test an architecture in which a trade is completed not merely through the transfer of the asset or solely through payment, but through both steps simultaneously.
According to the project brief, such a mechanism could reduce settlement risk and manual processes in bond servicing. However, the scope of the current test is limited. Claims that India is already tokenizing the entire corporate bond market therefore do not reflect the project’s status. SEBI materials confirm a regulatory pilot, not a broad deployment.
The regulator’s materials likewise do not confirm the frequently cited $620 billion figure for the entire market. Such an estimate depends on the methodology used and is not a parameter of the Demat 2.0 pilot.
Retail and Secondary Trading Will Come Later
The first stage is intended for institutional participants. SEBI expects secondary trading and possible access for retail investors only in a later phase, but the timing and specific rules for retail have not yet been confirmed.
Further progress will depend on the testing results. Areas that will need monitoring include cybersecurity, scalability, system resilience and settlement finality. It will also be important to see whether SEBI, after evaluating the pilot, prepares a broader regulatory framework or expands the solution to other financial instruments.
Sources
- SEBI – Demat 2.0 FAQ – Confirms the pilot’s scope, the private permissioned DLT, use of the CBDC e₹, atomic settlement, preservation of the bonds’ legal nature and planned phases.
- SEBI – press release – Confirms that SEBI officially announced the successful launch of the Demat 2.0 pilot on September 10, 2026.
- REC Limited – first pilot issuance – Confirms REC’s participation and completion of the first pilot issuance of tokenized corporate bonds.
- The Indian Express – Corroborates the pilot’s launch, the participation of three issuances and the market institutions involved.
Verified and updated: 09/11/2026 15:22
