A corporate bond that settles the moment it is bought, pays interest without anyone running a reconciliation, and still carries exactly the same legal protections as before — that is the pitch behind "Demat 2.0," jointly unveiled by RBI Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey at the Global Fintech Fest in Mumbai. Three issuers have already used it to raise ₹1,025 crore.
Quick answer
SEBI and RBI have jointly launched "Demat 2.0," a pilot that lets corporate bonds be issued as digital tokens on a shared distributed ledger maintained by the depositories, with the funds leg settled in RBI's wholesale central bank digital currency (e₹) through its Unified Market Interface. This enables atomic settlement — the bond and the money move at the same instant — and automates interest and redemption payments through smart contracts. Three issuers have used the pilot so far: REC Limited, L&T Limited and IIFL, together raising ₹1,025 crore. The legal nature of the bond, investor rights, and requirements on credit rating, debenture trustees, listing and disclosure remain entirely unchanged.
What is Demat 2.0?
Demat 2.0 is new market infrastructure built to test an alternative way of issuing, holding, trading and settling corporate bonds. Instead of a conventional demat entry, the bond is created as a digital token on a distributed ledger — a shared electronic record maintained simultaneously by Market Infrastructure Institutions using Distributed Ledger Technology (DLT), owned by the depositories. That ledger is connected to RBI's wholesale Central Bank Digital Currency (e₹) through RBI's Unified Market Interface (UMI), which is what enables atomic settlement: the bond and the corresponding payment move at the same instant, rather than in separate legs.
A distributed ledger is a record book that several authorised institutions hold identical copies of at the same time, instead of one institution holding the master record. "Atomic settlement" means the bond and the money change hands as a single, indivisible step — you can't end up with the bond but not the payment, or the payment but not the bond. A "smart contract" is simply an instruction written into the ledger — for example, "pay interest to whoever holds this bond on this date" — that carries itself out automatically, without a person initiating each payment.
Taken together, SEBI states these features are expected to make the issuance, settlement and servicing of corporate bonds faster, more efficient and less error-prone.
What changes, and what doesn't?
SEBI states these bonds trade in the same manner as bonds held in conventional demat form, so the market is not fragmented by the pilot.
Advantages cited by SEBI
Same-day funds receipt after bidding, and lower expected cost of issuance and servicing as manual processes are automated.
Reduced file sharing, reconciliation and validation work, since bondholder details are visible to all authorised institutions on the shared ledger.
Immediate funds on secondary-market sale (versus 2–3 days), letting proceeds be redeployed sooner, and interest/redemption automatically credited on the due date.
Settlement risk is eliminated through atomic settlement, since the bond and the payment move as a single step.
Current status: three issuers, ₹1,025 crore
Roadmap: what's next
How India's approach differs from global precedents
SEBI notes that bond tokenisation has already been tried elsewhere — Project Helvetia III in Switzerland, Project Evergreen in Hong Kong, and tokenised issuances of US treasury bonds and bonds from BlackRock, JP Morgan and AIIB among them. SEBI characterises those efforts as largely undertaken by individual issuers on separate platforms. India, by contrast, is described as the first country where corporate bonds have been issued natively on a distributed ledger, with the ownership record held by the country's statutory depositories and the funds leg settled in central bank digital currency — all within the existing regulated market infrastructure, rather than on a standalone platform.
How can investors participate?
Tokenised bonds sit in the investor's existing demat account — there is no separate account to open and no fresh KYC. Two additional steps are needed: the investor must enable Demat 2.0 with their depository, and must hold a wholesale CBDC (e₹) wallet with a participating bank to settle the funds leg. SEBI states that FAQs explaining the pilot and how to participate are being issued alongside this press release.
CorpLawUpdates analysis
The headline claim — that investor safeguards, the legal character of the bond and disclosure obligations are entirely unaffected — is the point most compliance teams will want to stress-test as the pilot scales. This press release does not spell out the specific regulatory basis under which the pilot operates (for instance, whether it runs under a regulatory sandbox framework or a specific exemption), nor does it detail eligibility criteria for issuers or investors during this phase — the three issuances so far range from 1 to 18 investors, suggesting participation remains tightly curated rather than open. It is also unclear from this release how a debenture trustee's oversight function interacts with a smart contract that pays bondholders automatically; that interaction will matter more once volumes grow beyond a handful of investors per issuance. Market participants advising on debt capital markets should watch for the FAQ document referenced in the release and for any formal circular that may follow as the pilot moves toward secondary trading and retail access.
Frequently asked questions
What is Demat 2.0?
A pilot market infrastructure that lets corporate bonds be issued as digital tokens on a distributed ledger, with the funds leg settled in RBI's wholesale central bank digital currency, enabling atomic settlement of the bond and the payment.
Who announced Demat 2.0, and where?
RBI Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey jointly announced it at the Global Fintech Fest, Mumbai.
How is a Demat 2.0 bond different from a normal demat bond?
The underlying technology changes — ownership is recorded on a distributed ledger maintained by the depositories, and payments settle via RBI's CBDC — but the bond remains the same legal instrument, with the same investor rights and issuer obligations.
Do investors need a new account to hold Demat 2.0 bonds?
No. Tokenised bonds are held in the investor's existing demat account. Investors need to enable Demat 2.0 with their depository and hold a wholesale CBDC (e₹) wallet with a participating bank, but no fresh KYC is required.
Which companies have issued tokenised bonds so far?
Three issuers have raised a combined ₹1,025 crore: REC Limited (₹500 crore, September 7, 2026), L&T Limited (₹500 crore, September 9, 2026) and IIFL (₹25 crore, September 9, 2026).
Do the usual bond compliance requirements still apply?
Yes. Requirements relating to credit rating, debenture trustees, listing and disclosures continue to apply in full; only the technology used to record ownership and service the bond changes.
What makes India's approach different from other countries' tokenisation projects?
SEBI states that other pilots, such as Project Helvetia III in Switzerland and Project Evergreen in Hong Kong, have largely involved individual issuers on separate platforms. India is described as the first country to issue corporate bonds natively on a distributed ledger, with ownership held by the statutory depositories and the funds leg settled in central bank digital currency, within the existing regulated market infrastructure.
Can retail investors currently participate?
Not yet. Later phases are expected to extend to secondary trading via existing RFQ platforms and to retail investor access; the current phase involves a small number of investors per issuance.
What happens after the pilot?
SEBI states the pilot is being taken forward in phases, with the experience gained expected to guide any wider rollout.
Document: SEBI Press Release — "Successful launch of 'Demat 2.0': Pilot project for Tokenised Corporate Bonds"
Issuing authority: Securities and Exchange Board of India, Communications Division
Reference number: PR No. 56/2026
Date and place: Mumbai, September 10, 2026
This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Readers should verify the applicable primary regulatory source before taking action.
