India Launches $620B Tokenised Bond Pilot

India has activated a blockchain pilot for its US$620 billion corporate bond market. The Securities and Exchange Board of India launched Demat 2.0 to issue and settle tokenised bonds. This framework uses central-bank digital money for final settlement.

Three major institutions participated in the initial phase. REC, Larsen & Toubro, and IIFL Finance raised a combined 1,025 crore rupees through the system. The digital bonds retain the same legal rights as traditional paper instruments.

Digital Rupee Settlement Mechanism

The pilot connects tokenised bonds to the Reserve Bank of India’s wholesale digital rupee. This link operates through the Unified Market Interface. The structure allows bond delivery and payment to settle simultaneously.

Simultaneous settlement reduces counterparty risk in traditional transactions. It eliminates the period where one party has paid but not received the asset. This mechanism lowers systemic exposure during the settlement window.

Automated Corporate Actions

Smart contracts manage routine bond operations within the pilot. These algorithms handle interest payments and principal redemptions automatically. This removes manual processing steps from the lifecycle.

Future phases will introduce secondary-market trading for these tokens. Retail investor access is also planned for later stages. The current pilot remains limited to regulated institutional participants.

Regulated Financial Infrastructure

The system integrates tokenisation into India’s existing financial architecture. Banks, depositories, and central-bank money remain at the core. This approach avoids creating a separate, unregulated digital asset market.

GN auto markets/bonds: corporate bonds reports confirm the pilot’s operational status. The framework balances innovation with established regulatory oversight. It positions India’s bond market for future digital distribution.