India launches Demat 2.0 blockchain pilot for tokenized corporate bonds
In brief
- RBI and SEBI unveiled Demat 2.0 on September 10 at Global Fintech Fest, testing tokenized securities with CBDC settlement.
- Pilot launched with Rs 500 crore L&T bond backed by SBI, Axis Bank, SBI Mutual Fund and NSDL.
- Tokenization splits assets into smaller digital units, reducing costs and expanding retail investor access.
- Framework could extend to equities, mutual funds and gold if pilot succeeds.
- India shapes global financial architecture through digital public infrastructure and Unified Ledger Interface.
The Demat 2.0 Framework
The pilot began with three issuances, including a Rs 500 crore Larsen & Toubro bond backed by SBI, Axis Bank, SBI Mutual Fund and NSDL. The new system brings tokenised securities together with digital settlement assets and smart contracts, using CBDC for settlement. Major institutions involved include CDSL, NSDL, BSE, NSE, HDFC Bank, ICICI Bank and NPCI.
The core innovation lies in how tokenisation works. Tokenisation of financial assets involves dividing assets into smaller digital units, potentially reducing the cost of ownership and widening access for retail investors. A Rs 10 lakh bond could, for instance, be split into Rs 100 units. This approach democratizes access to institutional-grade securities that were previously out of reach for smaller investors.
"The project will examine whether distributed ledger technology can integrate the security and settlement sides of transactions more closely, while speeding up settlement and automating parts of asset servicing," SEBI Chairman Tuhin Kanta Pandey said.
Scope and Future Applications
Digitisation can also strengthen ownership records and reduce settlement periods. The framework maintains legal certainty over ownership while introducing new market infrastructure. The model could later be applied to equities, mutual funds and gold.
Some tokenised assets already exist in India's markets. Commercial papers and certificates of deposit already use tokenised forms through the unified markets interface and CBDC. RBI Executive Director P. Vasudevan said the RBI is also examining gold tokenisation.
Beyond tokenisation, the RBI is developing digital public infrastructure such as the ULI, which is intended to provide common rails for consent-based credit delivery similar to the Unified Payments Interface. These efforts position India as a builder of financial infrastructure for emerging markets and the Global South—a strategic shift toward shaping global finance architecture.
