India launches tokenized bond pilot with $107M issued
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
India’s Securities and Exchange Board (SEBI) and the Reserve Bank of India (RBI) have launched a pilot program for issuing tokenized corporate bonds using Demat 2.0, a digital token system on a distributed ledger. Three companies—REC, Larsen & Toubro, and IIFL—have issued a combined total of approximately $107 million (10.25 billion rupees) through this infrastructure. The bonds are settled via the RBI’s wholesale central bank digital currency (CBDC) using the Unified Market Interface.
Why it matters
SEBI states this pilot allows same-day fund transfers upon bidding, eliminating the typical two to three-day settlement delay, through atomic settlement and smart contract automation for interest and redemption payments. The pilot creates a more efficient, transparent system by combining distributed ledger issuance, statutory depository ownership records, and CBDC-based settlement within existing regulated markets. The impact on wider market adoption and users will be evaluated in later phases.
Key context
The pilot expands on an initial plan centered around REC’s issuance, now including Larsen & Toubro and IIFL, more than doubling the originally anticipated issuance volume. Future phases plan to introduce secondary trading and retail investor access. Investors can hold tokenized bonds in their current Demat accounts without new KYC processes but must enable Demat 2.0 and maintain wholesale CBDC wallets for settlements.
Key numbers and entities
The pilot involves SEBI, the RBI, REC (5 billion rupees raised from 18 investors), Larsen & Toubro (5 billion rupees from four investors), and IIFL (250 million rupees from one investor). The total issuance currently stands at 10.25 billion rupees, or about $107 million. The system interfaces with the RBI’s wholesale CBDC and uses the Unified Market Interface.
What remains unclear
The source does not specify the timeline for secondary trading launch or retail investor participation. Details on broader rollout plans beyond the pilot phases and specific technical or regulatory challenges encountered remain unaddressed. The long-term effects on bond market liquidity and investor protections are also not detailed.