India Launches Blockchain Pilot to Tokenize $620 Billion Corporate Bond Market

India’s securities regulator has begun a pilot program that uses blockchain technology alongside the country’s central bank digital currency to issue and settle corporate bonds. The initiative, called Demat 2.0, builds on the electronic account system Indian investors already use to hold stocks and bonds, allowing companies to issue bonds as digital tokens on a shared ledger managed by regulated institutions.

Several major companies have already used the system to raise funds, including a state owned power lender, a large engineering firm, and a non bank lending company, collectively raising the equivalent of tens of millions of dollars. The bonds themselves retain standard features like fixed interest rates and set maturity dates.

System Reduces Settlement Risk Through Combined Payments

The pilot connects tokenized bonds directly with the Reserve Bank of India’s wholesale digital currency, allowing bond transfers and payments to settle simultaneously rather than through separate systems. This reduces the risk of one side of a transaction failing while the other proceeds. Interest payments and bond redemptions can also be automated through smart contracts.

Future phases of the program are expected to introduce secondary market trading and eventually expand access to retail investors. The approach reflects India’s broader strategy of integrating tokenization within existing regulated financial infrastructure, rather than shifting toward open cryptocurrency markets, even as the country continues to rank among the world’s top nations for crypto adoption.