SEBI Demat 2.0 Settles Tokenized Bonds in Digital Rupees

India Starts Tokenizing Corporate Bonds

India's securities regulator has taken dematerialisation, the shift from paper certificates to electronic records, to its next stage. On September 10, the Securities and Exchange Board of India (SEBI) announced the successful launch of Demat 2.0, a pilot in which corporate bonds are issued as native tokens on a distributed ledger and settled against the digital rupee. According to CoinDesk, the first issues came from REC, Larsen & Toubro and IIFL Finance.

• First issues: REC and Larsen & Toubro raised ₹500 crore each and IIFL Finance ₹25 crore, a combined ₹1,025 crore, according to CoinDesk
• Settlement: atomic delivery-versus-payment against the e₹ under the Reserve Bank of India's pilot, so the bond and cash legs settle together or not at all
• Investor access: a Demat 2.0 account extends the investor's existing demat account, with no new account or fresh KYC
• Rollout: three stages, from institutional issuance to secondary trading and retail access

What Exactly Is Being Tokenized?

SEBI's FAQ is emphatic on one point: the token is the corporate bond itself. It is not a wrapper, an IOU or a new asset class. Each bond is issued as a native digital token on a private, permissioned ledger owned by India's depositories, and it keeps the same ISIN, coupon, maturity, covenants, rating and investor rights as a conventional dematerialised bond. It remains a security under the Securities Contracts (Regulation) Act, 1956, and the depository remains the authoritative record of ownership.

What changes is the plumbing. The bond's key terms, such as the coupon rate, payment dates, day-count convention and redemption terms, are encoded in a smart contract. Coupons and redemptions can then execute automatically based on the holdings recorded on the ledger on the record date, cutting the manual instructions and reconciliation that each corporate action normally requires.

How Does Atomic Settlement With a CBDC Work?

This is the part of the design that blockchain analysts will find most interesting. In a conventional trade there is a gap between delivering a security and receiving payment, and that gap is where counterparty risk lives. Demat 2.0 links the securities leg and the cash leg on the same ledger infrastructure, so they settle atomically: if the bond transfer succeeds, the digital rupee payment succeeds, and if either fails, neither goes through.

The cash side runs through CBDC wallets that participants open with their own banks under the RBI's e₹ pilot. Issuers receive proceeds in a CBDC wallet and use it for coupon and redemption payments. CoinDesk reports the settlement uses the wholesale tier of the digital rupee.

What Changes for Bond Investors?

Very little on the surface, which is the point. Issuers still raise money through the stock exchanges' existing Electronic Bidding Platform, and bidding and allotment timelines are unchanged. Investors do not handle cryptographic keys; the depositories hold and manage them, and holdings stay visible in the usual depository statements. There is no separate tokenized exchange either: existing RFQ and OTC reporting platforms will connect to the ledger when secondary trading opens.

The pilot runs under SEBI's Regulatory Sandbox, with the market infrastructure institutions operating the ledger and NPCI providing technology support. Nodes start with the depositories and stock exchanges.

The Three-Stage Roadmap

• Stage I: tokenized issuance through the bidding platform, with asset servicing on the ledger and mostly institutional participation
• Stage II: secondary-market trading, with access extended to retail investors. Until then, an interim peer-to-peer demat transfer offers an exit route
• Stage III: nodes for credit rating agencies, depository participants and other regulated entities, plus more instruments and corporate actions

India is building tokenization inside regulated infrastructure (depositories, banks and central-bank money) rather than on open networks, a model that echoes South Korea's three-stage tokenized securities plan and Japan's study of blockchain settlement for stocks and bonds. Track more tokenization milestones in our crypto coverage.

Sources: SEBI press release — September 10, 2026; SEBI Demat 2.0 FAQ — September 2026; CoinDesk — September 11, 2026.