SEBI, RBI launch ‘Demat 2.0’ pilot for corporate bond tokenisation

On Thursday, the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) unveiled "Demat 2.0," a pilot program to explore the tokenisation of corporate bonds and expedited settlement using the central bank digital currency and blockchain technology. SEBI Chairman Tuhin Kanta Pandey explained that the initiative aims to bring security and settlement processes closer together, facilitate faster settlement, and automate certain asset servicing aspects.

The pilot, spearheaded by depositories like CDSL and NSDL, exchanges such as BSE and NSE, banks like HDFC Bank and ICICI Bank, and the National Payments Corporation of India (NPCI), commenced with three issuances, including a Rs 500 crore bond from Larsen & Toubro. The latest version of Demat, following the introduction of Demat 1.0 in 1996, combines tokenised securities with digital settlement assets utilizing smart contracts and settles via the CBDC.

Pandey emphasized preserving legal ownership certainty amidst the exploration of new technology and infrastructure. The tokenisation process could eventually extend to other asset classes, including equity, mutual funds, and gold, with some debt instruments like commercial papers and certificates of deposit already being traded in tokenised form.

Tokenisation breaks down assets into smaller units, making them more accessible to retail investors at lower ownership costs. At the same event, RBI Governor Shaktikanta Das highlighted India's potential to shape global finance architecture, noting that India's fintech sector, with 30 unicorns, ranks third globally.