Larsen & Toubro (L&T) has become India's first private sector corporate to issue tokenised bonds, raising ₹500 crore through a three-year bond under the Securities and Exchange Board of India's (SEBI) blockchain based tokenisation framework. As per NDTV Profit, the landmark issuance marks a major step forward in the digitalisation of India's corporate debt market, with the funds settled using a Central Bank Digital Currency (CBDC) wallet that brings together tokenised securities and digital-currency-based settlement infrastructure. L&T said the combination represents a move towards more seamless, secure and efficient digital capital-market transactions, with the company expecting DLT to make bond transactions more transparent and efficient while supporting the continued development of India's corporate bond market. The transaction is part of L&T's broader adoption of technology-led solutions in capital raising and treasury operations, with the company reporting a standalone total income of ₹1.61 lakh crore in FY26, up 8.68% year-on-year.
The Demat 2.0 system connects to the RBI's wholesale CBDC through the Unified Market Interface, enabling atomic settlement where bonds and money move simultaneously. This technology reduces settlement risk significantly because one side of the transaction does not remain pending after the other side is completed. Under the current system, interest and redemption payments require issuers or registrars to obtain bondholder lists from depositories, calculate payments separately, and route money through banking channels. Under Demat 2.0, bondholder details are visible to authorised institutions on the shared ledger, and payments in e-rupee can reach bondholders' CBDC wallets on the due date. As per ET Now, NSDL MD Vijay Chandok explained that the system uses atomic settlement where securities and payment happen at the same time, allowing investors to give and take money instantly with settlement cycle becoming instant. This automation can reduce reconciliation delays and improve overall transaction efficiency.
REC remains the first issuer on September 7, raising ₹500 crore from 18 investors at 7.30% coupon with a maturity of 1 year and 9 months, followed by L&T raising ₹500 crore from four investors on September 9 at 7.4% via bonds maturing in three years, and IIFL Finance raising ₹25 crore at 9.1% via bonds maturing in two years. As per The Times of India, the bonds are created as digital tokens on a distributed ledger, a shared electronic record maintained by market infrastructure institutions using DLT, with the ledger owned by the depositories. Combined participation across the three deals reached 23 investors, assuming no investor appeared in more than one transaction. L&T's outstanding non convertible debentures totaled ₹9,800 crore as of March 31, 2026, alongside ₹14,600 crore raised through listed commercial papers, demonstrating the company's substantial debt market presence and the potential of tokenisation to support wider investor participation and potentially improve liquidity in the corporate debt market.
Future phases of Demat 2.0 will enable trading and retail investor access in India's tokenised bond market, expanding beyond the current pilot program. The framework leverages Distributed Ledger Technology (DLT) and connects the bond market with the RBI's wholesale central bank digital currency (CBDC) for settlement. Sebi Chairman Tuhin Kanta Pandey confirmed that the next phase will introduce secondary level trading, allowing bond transfers through existing request-for-quote platforms. For investors, bonds will be held in their existing demat accounts, with no separate account or fresh KYC required. As per ET Now, NSDL MD Vijay Chandok noted that Demat 2.0 is currently only in the pilot stage and secondary-market trading in tokenised bonds is not available yet, stating "These are for investors, not traders". The pilot is being implemented in three stages: Stage I focuses on tokenised corporate bond issuance through existing Electronic Bidding Platform (EBP) with initial institutional participation, Stage II introduces secondary-market trading with retail access, and Stage III considers expansion to credit rating agencies and other financial instruments.
Sebi Chairman Tuhin Kanta Pandey emphasized that Demat 2.0 does not create a new asset class or require investors to open a new demat account or complete fresh KYC processes. He stated that "There is no parallel market. There is no liquidity divide. Asset is same. There is no new Demat account. There is no need for a new KYC". The regulator also plans to examine the use of DLT for functions such as pledging, covenant monitoring and automated servicing of bonds, including coupon and repayment processes. Sebi said this technology can improve efficiency in securities market transactions and automate asset servicing, including interest payments and redemption, through smart contracts. These are instructions written into the ledger that execute automatically. Under the current system, interest and redemption payments require manual processing by issuers or registrars. Under Demat 2.0, bondholder details are visible to authorised institutions on the shared ledger, eliminating the need for separate KYC checks and demat account openings. As per ET Now, NSDL MD Vijay Chandok clarified that the existing Demat system will continue to operate, with Demat 2.0 adding the capability of simultaneous settlement, stating "The difference is this is instantaneous. You give and take simultaneously".
