Demat 2.0: Tokenised India

A Pilot Like No Other

₹1,025 crore and 23 institutional investors can't be wrong. On 10 September 2026, SEBI and the RBI launched Demat 2.0 at the Global Fintech Fest, Mumbai. Demat 2.0 is India's first tokenised corporate bond pilot, run under SEBI's Regulatory Sandbox. Before the launch, REC, L&T and IIFL Finance together raised ₹1,025 crore (about $107 million) through tokenised corporate bonds.

The tokenised bonds represent the same investments as their non-tokenised counterparts and enjoy the same rights. The difference is in how title to the investment is recorded and settled. Title to the investment is recorded on a distributed ledger, and payment is settled using the wholesale digital rupee.

The End-to-End Process of the Tokenised Bond Pilot

NSDL and CDSL, the two depositories in India, have collaborated to set up the infrastructure for the pilot. They operate the permissioned DLT, record the tokenised bonds on it, and hold investors' private keys on their behalf.

Currently, no additional KYC is required to participate in the tokenised bond pilot. Also, no new demat account is required. A Demat 2.0 account is an extension of the investor's existing demat account, activated with the investor's consent through the depository or DP.

In order to transact on the tokenised bond pilot, a wholesale CBDC (e₹) wallet with a participating bank is required. HDFC Bank and ICICI Bank are the named participant banks.

Bidding utilises the existing Electronic Bidding Platform (EBP). NSE processed REC and L&T, and MSEI processed IIFL. The timelines for bidding, modification and cancellation, as well as the allotment of securities, are the same as for a debt offering made through the private placement route. The only difference is that the ISIN is flagged as a pilot tokenised bond.

Post-allotment, the bond is credited to the investor's Demat 2.0 sub-account, and at the same moment the issuer receives the proceeds in its CBDC wallet. Either both sides settle, or neither does, so the gap between trade and settlement, and the counterparty risk that comes with it, is eliminated.

The pilot has three stages.

In the first stage, which is the current status, only institutional issuance is allowed through the EB, P and servicing of the bond is done on the DLT ledger.

In the second stage, secondary-market trading and retail access open up, with an interim peer-to-peer demat-to-demat transfer mechanism for early liquidity.

The third and final stage could extend ledger nodes to credit rating agencies, depository participants and other regulated entities, along with a wider range of instruments and corporate actions.

The Digital Rupee (e₹) of RBI: Wholesale and Retail

The RBI's digital rupee comes in two versions. Retail (e₹-R) is for everyday payments by the public. Wholesale (e₹-W) is for banks and large financial institutions.

Demat 2.0 runs only on e₹-W. There is no relation between the bond pilot and the RBI’s retail digital payments programme (e₹-R).

Wholesale e₹ has been designed to settle transactions between banks and other financial institutions. Hence, it can be used to settle securities transactions carried out by banks and financial institutions. As of now, the pilot is limited to the participation of institutions. What will happen in the second stage when retail participation is allowed? Neither RBI nor SEBI has indicated whether retail investors would settle through e₹-W or e₹-R.

Recent Developments and Comparison of the Three Issuances

Amount raised by issuer

The First of its Kind: Issuance by REC Limited

REC is a Maharatna Central Public Sector Enterprise (CPSE) under the Ministry of Power and is engaged in financing of the power sector. As a high-rated, well-known credit, it was a safe choice to open the pilot.

The issue closed on 7 September 2026. The base offer was fixed at ₹100 crore. The green-shoe option was set at ₹400 crore.

Subsequently, 18 institutions placed bids totalling ₹796 crore (nearly 8 times the base offer) on NSE's Electronic Bidding Platform. The company exercised the green-shoe option in full and finally accepted ₹500 crore, making the issue about 1.6 times covered on the final amount.

Reported bidders include HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, AK Capital Services, ICICI Securities Primary Dealership, Taurus Group and Trust Investment Advisors.

The bond bears a coupon of 7.30% per annum with a tenure of 1 year and 9 months.

Note that there’s a distinction between being an arranger and a bidder. HDFC Bank confirmed it was an arranger but did not confirm buying the bonds. Taurus Group confirmed it was both an arranger and a bidder.

Larsen & Toubro (L&T): First Private Sector Issuer

L&T is one of the largest private sector engineering, construction and technology companies. It issued bonds two days after REC Limited and proved that the route was also open to private sector companies.

L&T raised ₹500 crore by issuing 50,000 tokenised NCDs of ₹1 lakh each. The NCDs have a 3-year tenure, with a coupon rate of 7.40% per annum.

The book was tight, with just 4 institutional investors compared with REC's 18.

The bids were executed on NSE's Electronic Bidding Platform under SEBI's regulatory sandbox. The NCDs were created on NSDL's Demat 2.0 ledger, and settlement was done through RBI's wholesale CBDC via the Unified Market Interface, with same-day atomic delivery versus payment.

The names of the bidders have not been disclosed, which is common for private placements.

IIFL Finance Limited: First Non-PSU NBFC Issuer

IIFL Finance Limited (IIFLF) is part of the IIFL Group and is a non-banking finance company operating in the corporate and retail finance space. IIFLF is the first non-banking finance company (NBFC) to take part in SEBI's Demat 2.0 pilot.

IIFLF raised its bonds on 9 September 2026, the same day as L&T, and announced the deal in a press release on 15 September.

₹25 crore (~USD 2.6 million) of IIFLF bonds were raised from a single institutional investor, with a maturity of 2 years. The coupon was set at 9.1%.

Unlike the other two offers, the bid was placed on the Metropolitan Stock Exchange of India (MSEI), not NSE's EBP. The listed bonds will be traded on the National Stock Exchange of India (NSE).

Trust Investment Advisors Private Limited was the sole arranger and adviser for the issue.

Institutional investors per issuance

What's Still Unclear

We do not know how much each institution bought in the L&T and REC issues. The total amount raised and the number of investors are the only details disclosed.

There is no clarity on when retail investors will be allowed to participate in the pilot.

When retail access is provided, same-day bond settlement and zero counterparty risk could allow Demat 2.0 to serve as the foundation for tokenising many other asset classes.

Sources: SEBI press release PR No. 56/2026 (Demat 2.0 pilot) and FAQ, Business Standard, The Block, IIFL Finance press release (PRNewswire), Crowdfund Insider, Kotak Securities.