India Adopts Digital Rupee for Bond Transaction Settlements

India has raised Rs. 1,025 crore via tokenised corporate bonds in three deals, which have been settled using the RBI's wholesale digital rupee. According to the Securities and Exchange Board of India (SEBI), the Demat 2.0 pilot project links a distributed ledger of India's statutory depositories with RBI's Unified Market Interface. It allows for the simultaneous transfer of both the bond and money using atomic settlement. The first deal was done by REC Limited on September 7 and raised  Rs. 500 crore from 18 investors.

Tokenised Bonds Retain Existing Investor Rights and Regulations

The release by SEBI also said that Larsen & Toubro made another move on September 9, purchasing a Rs. 500 crore bond. This time, there were four buyers. IIFL issued Rs. 25 crore bonds for just one buyer on the same day. The SEBI and RBI disclosed the pilot at Global Fintech Fest in Mumbai. The Demat 2.0 project was jointly launched by the Chairman of SEBI, Tuhin Kanta Pandey, and the Governor of RBI, Sanjay Malhotra. This is not a new form of security issuance nor a change in the issuer's liability towards payment.

The tokenised bonds retain their respective interest rates, maturities, and legal rights. The current rules concerning credit rating, debenture trustee, listing in exchanges, and company disclosures will remain relevant. Ownership information is stored on a distributed ledger system managed by regulated depositories of India. They can hold the securities using their existing demat accounts. Therefore, there is no requirement to have an additional securities account or verification process.

Even then, participation requires the investor to use the Demat 2.0 service through the depository. Investors must have a wholesale digital rupee wallet with a participating bank since the payment is made in RBI currency.

SEBI referred to it as India's first indigenous distributed-ledger issuance of corporate bonds where statutory depositories will hold records of ownership and central bank digital currency will settle the cash leg of the transaction. In other countries, similar initiatives have usually relied on platforms designed for individual issuers.

Phase one is still centered around corporate bond issuance. According to SEBI, the process of issuance continues. However, there was no mention made regarding which companies, what amount of transactions, or when they will take place.

Phase two will tie together tokenised bonds and India's existing request-for-quotation platforms. It will be possible to buy and sell these securities after their issuance, keeping trading in the existing regulated market environment.

Earlier in October 2025, Union Minister Piyush Goyal announced that the government is looking to introduce a digital currency backed by the RBI, while adding that the government does not support private cryptocurrencies that lack asset backing. In contrast to conventional banking systems, the RBI-guaranteed digital currency is meant to streamline transactions, enable faster and traceable payments, and reduce paper consumption.