SEBI Launches Demat 2.0 Pilot for Tokenised Corporate Bonds

The Securities and Exchange Board of India (Sebi) on Thursday launched Demat 2.0, a pilot project aimed at tokenising corporate bonds using distributed ledger technology (DLT). Jointly launched by Reserve Bank of India Governor Sanjay Malhotra and Sebi Chairman Tuhin Kanta Pandey at the Global Fintech Fest, the initiative will test a new system for issuing, holding, trading and settling corporate bonds.

The pilot has already seen three companies issue tokenised bonds worth a combined Rs 1,025 crore. REC was the first issuer on September 7, raising Rs 500 crore from 18 investors, followed by L&T, which raised Rs 500 crore from four investors on September 9, and IIFL, which raised Rs 25 crore. Under the system, bonds are represented as digital tokens on a shared ledger maintained by market infrastructure institutions and owned by depositories. Sebi said the bonds remain legally identical to conventional instruments, with existing requirements for credit ratings, debenture trustees, listings and disclosures continuing to apply.

The system is connected to the RBI’s wholesale central bank digital currency (CBDC), the digital rupee, through the Unified Market Interface, enabling atomic settlement, where the bond and payment can move simultaneously. Sebi expects the technology to make issuance, settlement and servicing faster, more efficient and less prone to errors, while smart contracts could automate interest payments and redemptions. The pilot will initially focus on ongoing issuances before expanding to secondary trading and eventually retail investor access, while investors will continue using their existing demat accounts without needing a separate account or fresh KYC.

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