India has commenced settling corporate bonds with the help of distributed ledger technology and central bank digital currency, bringing tokenization further into its mainstream financial markets.
The Securities and Exchange Board of India rolled out Demat 2.0 this week, a trial centered on the electronic depository accounts that Indian investors currently utilize for equities and fixed-income assets. Through this initiative, corporate notes can be distributed as cryptographic tokens on a shared ledger maintained by authorized market entities.
Earlier in the month, government-backed power sector financier REC secured ₹500 crore, equivalent to roughly $56 million, via the platform. Industrial and infrastructure conglomerate Larsen & Toubro subsequently secured an additional ₹500 crore, while non-banking financial company IIFL Finance brought in ₹25 crore, which is around $2.8 million.
These debt instruments preserve their traditional terms, featuring standard coupon rates, expiration schedules, and bondholder protections. Yet rather than routing through distinct clearing frameworks, the tokenized debt and the central bank digital currency employed for purchase can transfer simultaneously.
Demat 2.0 links the distributed bond ledger to the Reserve Bank of India’s wholesale central bank digital currency via its Unified Market Interface. This integration enables the financial asset and the payment funds to exchange hands together, eliminating trade counterparty risk.
Under standard clearing mechanisms, asset delivery and cash transfers are coordinated across distinct platforms. If one leg breaks down before finalization, a counterparty can remain vulnerable, whereas bonding the two together ensures simultaneous completion.
Corporate procedures such as coupon distributions and principal redemptions can similarly be executed via programmable smart contracts, whereas subsequent stages of the trial anticipate launching secondary market exchanges and ultimately expanding availability to retail participants.
This strategy is notable in a nation that has maintained a conservative stance toward decentralized cryptocurrencies, even though blockchain analytics organizations consistently rank the population among the leading global crypto adopters.
Rather than steering investors toward permissionless public blockchain ecosystems, Indian authorities are integrating tokenized assets directly inside their regulated monetary framework, keeping commercial banks, depositories, and sovereign digital money at the core.
Originally published at https://www.coindesk.com/markets/2026/09/11/india-starts-tokenizing-usd620-billion-corporate-bond-market-with-digital-rupee-settlement.
