Demat 2.0 Pilot Settles Tokenized Bonds in Seconds

India’s corporate bond market has cut settlement time from two to three days to near-instantaneous execution. The Securities and Exchange Board of India launched the Demat 2.0 pilot to test this new infrastructure. Three issuers have already raised 102.5 billion rupees under the system. The pilot aims to eliminate settlement risk and automate payment processes. This shift marks a significant change in how bond transactions are handled.

Tokenization enables atomic settlement

Demat 2.0 creates bonds as digital tokens on a distributed ledger. This ledger is maintained by depositories using distributed ledger technology. The system connects to the Reserve Bank of India’s wholesale central bank digital currency. This link allows for atomic settlement. The bond and the corresponding funds move simultaneously. This removes the gap between the transfer of securities and cash.

Investors gain immediate fund access

Secondary market transactions now settle immediately under the pilot. Previously, investors waited two to three days to receive funds. This delay prevented immediate redeployment of capital. The new system allows funds to be used immediately after a sale. Interest and redemption payments are also automated. Smart contracts on the ledger trigger these payments directly to digital wallets. This removes the need for manual processing by issuers and registrars.

Initial issuers raise substantial capital

Three companies have issued tokenized bonds so far. REC was the first issuer on September 7, 2026. It raised 50 billion rupees from 18 investors. L&T followed on September 9, raising 50 billion rupees from four investors. IIFL raised 2.5 billion rupees from one investor on the same day. The pilot is currently focused on primary issuances. Future phases will include secondary market trading and retail access. GN auto markets/bonds: bond trading reports indicate this infrastructure change is a key development for the sector.