India central bank, markets regulator launch tokenization pilot for corporate bonds and digital settlement

The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) have launched “Demat 2.0,” a pilot designed to test tokenised corporate bonds and faster settlement using blockchain technology and the central bank digital currency, according to The Indian Express.

The pilot, unveiled on Sept. 10 at the Global Fintech Fest in Mumbai, began with three issuances, including a Rs 500 crore Larsen & Toubro issue backed by investors such as SBI, Axis Bank, SBI Mutual Fund and NSDL.

The project will examine whether distributed ledger technology can integrate the security and settlement sides of transactions more closely, while speeding up settlement and automating parts of asset servicing, SEBI Chairman Tuhin Kanta Pandey said. CDSL, NSDL, BSE, NSE, HDFC Bank, ICICI Bank and NPCI are among the institutions involved.

“Demat 2.0” follows the original Demat initiative launched in 1996, which replaced paper-based shareholding with digital records. The new system brings tokenised securities together with digital settlement assets and smart contracts, using CBDC for settlement.

Pandey said that the framework would maintain legal certainty over ownership while introducing new market infrastructure. The model could later be applied to equities, mutual funds and gold, while commercial papers and certificates of deposit already use tokenised forms through the unified markets interface and CBDC. RBI Executive Director P. Vasudevan said the RBI is also examining gold tokenisation.

The tokenisation of financial assets involves dividing assets into smaller digital units, potentially reducing the cost of ownership and widening access for retail investors. A Rs 10 lakh bond could, for instance, be split into Rs 100 units. Digitisation can also strengthen ownership records and reduce settlement periods.

RBI Governor Malhotra said at the event that India could play a role in shaping the future architecture of global finance and become a trusted partner in the sector.

The RBI is also developing digital public infrastructure such as the ULI, which is intended to provide common rails for consent-based credit delivery in a model similar to the Unified Payments Interface.