India's tokenised bond pilot reaches ₹10.25 billion across three issuances
Key points
- L&T Limited raised ₹5 billion from four investors and IIFL raised ₹250 million from one investor on 9 September, bringing the Demat 2.0 pilot total to ₹10.25 billion ($107 million) across three issuances.
- Bonds in the pilot are natively digital instruments issued directly as tokens on a DLT network operated by NSDL and CDSL, not digital twins of pre-existing securities.
- Legal ownership under the Depositories Act is recorded on the distributed ledger itself, making the DLT the authoritative register rather than a secondary reference.
- The pilot's three-stage roadmap progresses from institutional-only issuance to retail-accessible secondary trading via RFQ platforms, and eventually to broader DLT node participation by credit rating agencies and depository participants.
- An RBI executive has signalled that gold may be the next asset class targeted for tokenisation, indicating regulatory appetite extending well beyond fixed income.
India’s Demat 2.0 tokenised bond pilot has expanded rapidly, with two further issuances on 9 September bringing the cumulative total to ₹10.25 billion (approximately $107 million). Engineering firm L&T Limited raised ₹5 billion from four investors, while brokerage IIFL raised ₹250 million from a single investor, following the inaugural issuance by REC Limited earlier in the week. Separately, a Reserve Bank of India (RBI) executive signalled that gold could be the next asset class to undergo tokenisation.
A common misconception about the architecture is worth addressing: despite the ‘tokenised bond’ label, these instruments are natively digital rather than digital twins of existing paper or dematerialised securities. The bond itself is issued as a token on a distributed ledger technology (DLT) network operated by India’s two central securities depositories, NSDL and CDSL. Ownership records on that ledger carry legal authority under the Depositories Act, meaning the DLT is the register, not a mirror of one.
The pilot is structured across three stages. The current first stage covers issuance and coupon servicing via smart contracts, with participation restricted to institutional investors. Stage two will introduce secondary market trading through existing request-for-quote (RFQ) platforms and open access to retail investors, with peer-to-peer transfers potentially available in the interim for liquidity. Stage three envisages extending DLT nodes to credit rating agencies, depository participants, and other regulated entities, and could bring additional instrument types into scope. The RBI signal on gold suggests regulators are already thinking about what comes after fixed income.
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