India Tests Digital Rupee Settlement for Tokenized Bonds
India has initiated a pilot to integrate blockchain-based corporate bonds with the central bank's digital currency.
India has begun testing blockchain-based corporate bonds as the Securities and Exchange Board of India and the Reserve Bank of India launched Demat 2.0. This pilot uses distributed ledger technology to manage tokenized debt instruments within the existing financial framework.
The program covers India’s $620 billion corporate bond market. It utilizes the RBI’s digital rupee for settlement processes. The goal is to speed up bond settlement and lower the risk of failed transactions.
First issuers raise 116 million dollars
Three companies have issued bonds under the new system. State-owned power lender REC and engineering firm Larsen & Toubro each raised 500 crore rupees. IIFL Finance raised an additional 25 crore rupees.
The combined total of these initial issuances is 1,025 crore rupees, or $116 million. These bonds retain standard coupon rates and maturity terms. They also maintain normal investor rights despite the digital infrastructure.
Settlement uses atomic delivery versus payment
The system links corporate bonds to the RBI’s wholesale digital rupee. This connection happens through the Unified Market Interface. The setup enables atomic delivery-versus-payment, where the bond and payment change hands simultaneously.
SEBI states that India is the first country to combine these elements. The pilot includes natively issued distributed-ledger bonds and statutory depository ownership records. It also incorporates CBDC settlement within regulated market infrastructure.
Investors use existing demat accounts
Participants do not need separate accounts to hold these tokens. Investors can keep the bonds in their existing Demat accounts. They must enable Demat 2.0 through their depository provider.
Settlement requires a wholesale CBDC wallet with a participating bank. The system connects with NSDL, CDSL, NSE, and BSE. It also works with HDFC Bank and ICICI Bank. This integration ensures the pilot fits into the current financial network.
