India’s capital market regulator has begun a closely watched experiment that could reshape how corporate debt is issued, recorded and paid for.
At the Global Fintech Fest in Mumbai, Reserve Bank of India Governor Sanjay Malhotra and Securities and Exchange Board of India Chairman Tuhin Kanta Pandey unveiled Demat 2.0, a sandbox pilot that places tokenized corporate bonds on a permissioned distributed ledger while settling the cash side in the central bank’s wholesale digital rupee.
The project does not invent a new security. Bonds issued under the pilot keep the same legal identity as ordinary dematerialised paper: the same ISIN, coupon, maturity, rating, covenants and investor protections.
What changes is the record-keeping layer. Instead of sitting only in conventional depository databases, each bond is created as a native digital token on a private ledger run by India’s statutory depositories.
Ownership remains legally anchored in the Depositories Act; the ledger is simply the form that record now takes.
Private keys stay with the depositories rather than with individual holders.
Settlement is designed to be simultaneous.
The tokenized security moves on the depository ledger while payment travels through the wholesale e₹ via the Reserve Bank’s Unified Market Interface.
The two legs are meant to complete together—an atomic delivery-versus-payment arrangement intended to shrink the gap that still exists between delivery of a bond and receipt of funds.
Coupon payments and redemptions can be programmed as smart-contract events on the same infrastructure.Investors already in the market do not open an entirely new account.
A Demat 2.0 facility is treated as an extension of an existing demat account and reuses current KYC.
Participants also need a wholesale CBDC wallet with their bank. Issuers themselves require only a CBDC wallet linked to a designated account to receive proceeds and make later payments.
The first phase is already live and confined largely to institutions. Rural Electrification Corporation completed the opening issuance on 7 September 2026, raising ₹500 crore from 18 investors.
Two days later Larsen & Toubro raised another ₹500 crore from four investors and IIFL Finance raised ₹25 crore from a single investor, bringing the early total to ₹1,025 crore.
Later stages are expected to add secondary trading on existing request-for-quote platforms, then retail access, and eventually other regulated instruments and more market participants as nodes on the ledger.
Officials present the pilot as an incremental upgrade of infrastructure India already possesses—depositories, electronic bond platforms and wholesale CBDC—rather than a leap into unregulated crypto markets.
If the technology proves reliable, supporters hope it will deliver faster finality, clearer audit trails and automated servicing in a corporate-bond market that has long struggled with liquidity and operational friction. The sandbox remains limited in size and scope; whether those gains materialise at scale will depend on later phases and how smoothly the system coexists with existing market plumbing.
