Invest2 publishers2 min readPublished
Depositories hold the keys to India's 10.25 billion rupee tokenized bond pilot
SEBI and the Reserve Bank of India now have 10.25 billion rupees of corporate debt live on a permissioned ledger settled in wholesale digital rupees, with the depositories holding the private keys and 23 investors holding the bonds.
The Investor · Invest desk
What happened
- Reserve Bank Governor Sanjay Malhotra and SEBI Chairman Tuhin Kanta Pandey unveiled Demat 2.0 in Mumbai, a sandbox issuing corporate bonds as tokens on a permissioned depository ledger with cash settled in wholesale digital rupees.
- Rural Electrification Corporation completed the opening issuance on 7 September 2026, raising 500 crore rupees from 18 investors.
- Larsen & Toubro and IIFL Finance followed within two days, taking the pilot's first phase to a combined 10.25 billion rupees raised by three issuers.
- Bonds issued in the sandbox keep the same ISIN, coupon, maturity, rating, covenants and investor protections as ordinary dematerialised paper.
- The bond moves on the depository ledger while payment travels through the wholesale digital rupee over the Reserve Bank's Unified Market Interface, with both legs designed to complete together.
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Why it matters
- capability Same-day proceeds change treasury planning for issuers: the two to three days a placed bond sat committed but unfunded no longer needs financing.
- constraint Getting in requires a wholesale CBDC wallet at a participating bank, so bank readiness sets the ceiling on how many investors the sandbox can reach before retail phases arrive.
- decision SEBI has to decide on secondary trading and retail access using evidence generated by 23 institutional buyers in a single week.
- precedent Any regulator copying the design needs a working wholesale CBDC leg first. That puts the central bank on the critical path of a tokenized bond market.
The pilot's most interesting term is where the private keys sit: with the depositories, not with the people who own the bonds [4]. Ownership is still decided under the Depositories Act, and the ledger is simply the form that record now takes [3]. SEBI said tokenization does not change the legal status of the bonds, the repayment obligations or investor protections [14]. Officials present the whole exercise as an incremental upgrade of infrastructure India already has [17].
Three issuers, 23 investors [1]. REC took 5 billion rupees from 18 of them, about 278 million rupees each [9][5]; L&T took 5 billion from four, so 1.25 billion apiece [9][4]; IIFL sold 250 million rupees to a single buyer [9]. Two of the three deals supplied 10 of the 10.25 billion rupees, or 97.6 per cent of the pilot [2], and the average holding across all of it is about 446 million rupees [3].
SEBI's operational claim is about timing. Two to three days of earlier cash on 10.25 billion rupees is worth between roughly 562,000 and 842,000 rupees for each percentage point of annual funding cost [6]. Coupons and redemptions can also run as smart-contract events on the same infrastructure [6]. Crowdfund Insider reported expectations of faster finality, clearer audit trails and automated servicing in a corporate bond market that has long struggled with liquidity and operational friction [18].
The launch came in bigger than the plan reported in August, when Reuters said the test would be a single REC issuance of less than 5 billion rupees to selected investors [15]. Two extra issuers went in, and the total came to more than double what REC alone had been expected to bring [16]. SEBI said issuance under the first phase is still open [20].
If the request-for-quote phase shows tokenized lines quoted tighter than their dematerialised equivalents, the record layer will have changed the market, and SEBI's claim to be the first to put native ledger issuance, depository-held ownership records and CBDC settlement inside existing regulated infrastructure [13] becomes a design other regulators can price. If the same institutions trade the same sizes at the same spreads, India will have rebuilt a working depository in a new format for programmable coupons and two days of float. I'd expect the second, on an evidence base of 23 buyers [1].
What to watch
- Whether tickets as small as IIFL's single 250 million rupee buyer recur, or phase one stays a two-issuer story.
- Whether SEBI publishes settlement and reconciliation data from the sandbox alongside issuance totals.
- Whether key custody ever moves from the depositories toward holders. That would change the legal analysis of ownership.