India’s tokenized bond pilot starts with institutions, with retail access planned next

India’s securities regulator has launched a pilot that places corporate bonds and their cash settlement on linked digital rails, moving ₹1,025 crore through the first three issuances while preserving the securities’ existing legal and economic terms.The Securities and Exchange Board of India announced Demat 2.0 on Sept. 10 after REC Limited, L&T Limited and IIFL completed tokenized bond issues on Sept. 7 and Sept. 9. The transactions comprised ₹500 crore from REC, ₹500 crore from L&T and ₹25 crore from IIFL, according to SEBI’s release. Further Stage I issuance is ongoing.The central change is how the security and payment meet. A corporate bond is issued as a native digital token on a private, permissioned distributed ledger, while payment uses the Reserve Bank of India’s wholesale digital rupee, a central bank currency designed for financial institutions.SEBI’s technical FAQ says the two legs are linked for atomic delivery-versus-payment. Either the bond and cash both settle, or neither does. That synchronization removes the interval in which a buyer could send funds before receiving the security, or a seller could deliver the bond before receiving payment. Issuer credit r...