Key Takeaways
- SEBI has launched a pilot for tokenised corporate bond transactions.
- The system connects corporate bonds with RBI’s wholesale CBDC.
- Indian companies have issued tokenised bonds worth ₹1,025 crore so far.
SEBI has launched Demat 2.0, a pilot project for tokenising corporate bonds and enabling instant settlement through distributed ledger technology. The system connects with the Reserve Bank of India’s wholesale Central Bank Digital Currency through the Unified Market Interface.
Demat 2.0 enables instant bond settlement
Demat 2.0 is designed to test a new process for issuing, holding, trading, and settling corporate bonds. Under the pilot, each bond is created as a digital token on a distributed ledger maintained by market infrastructure institutions.
The ledger is owned by depositories and uses Distributed Ledger Technology. It allows authorised institutions to view bondholder details on the shared record.
The system enables atomic settlement, meaning the bond and payment can move at the same time. Funds are settled through CBDC, with payments reaching bondholders’ CBDC wallets on their due dates.
Smart contracts can also automate asset servicing activities. These include interest payments and bond redemption. The process is designed to reduce manual steps and transaction errors while making settlement more direct.
Demat 2.0 connects with the RBI’s wholesale CBDC through its Unified Market Interface. This brings the digital bond record and digital payment process into the same regulated market infrastructure.
The pilot is being introduced in phases, with issuances under the first phase already underway. REC, L&T, and IIFL have issued tokenised bonds through the initiative so far. Their combined issuances total ₹1,025 crore.
For Indian businesses that raise funds through corporate bonds, the pilot provides a new transaction structure that combines digital securities with central bank digital currency settlement.
India tests corporate bonds on distributed ledger
Tokenisation projects have also been introduced in other markets, but many global efforts involve individual issuers using separate platforms. Demat 2.0 uses statutory depositories to maintain ownership records within India’s existing regulated market infrastructure.
The structure also links the ownership record with CBDC settlement. This creates a single digital process covering the bond and related payment.
The initiative comes alongside 2 new UPI features announced at the Global Fintech Fest. UPI Tap & Pay allows users with NFC-enabled smartphones to make payments at NFC-enabled Point of Sale terminals.
The feature does not require mobile internet on the user’s smartphone. The transaction can use the internet connection of the Point of Sale terminal.
NPCI has also introduced MyUPI, an AI-powered customer support solution built using its Small Language Model, FiMI. The service adds new functions to UPI Help.
MyUPI is designed to provide support within the UPI system, while Tap & Pay focuses on payments through NFC-enabled devices.
The Demat 2.0 pilot and the new UPI features cover different parts of India’s financial system. Demat 2.0 focuses on securities issuance, ownership, trading, and settlement, while the UPI initiatives target retail payments and customer support.
The corporate bond pilot remains in its testing phase, with further issuances expected as the phased rollout continues. The ₹1,025 crore issued so far provides the current scale of tokenised corporate bond activity under the initiative.
