Perspective

You can tokenize an asset in an afternoon. Turning it into a global market takes a rail that global capital is allowed to use. 1996. 2016. 2026. 1996: Paper became data. 2016: Money became a phone number. 2026: A bond became a token. In 1996, owning a share in India meant owning paper. Certificates, transfer forms, signatures, and weeks before a sale was recorded. NSDL began replacing that paper with electronic records. In 2016, sending money meant account numbers, IFSC codes and a wait. UPI replaced all of it with a phone number. In August 2026, it processed 24.51 billion transactions. In September 2026, REC, L&T and IIFL Finance raised ₹1,025 crore through bonds issued as tokens, with payment settled in the RBI’s wholesale digital rupee. The bond and the money moved in the same instant. Three rails. Each one removed a friction you once accepted as normal. The third rail has a boundary the first two never had to cross. These bonds live on a permissioned ledger owned by India’s depositories. A fund in Singapore cannot reach them on-chain. Neither can a market maker on a public blockchain. The corporate bond market they belong to is worth $620 billion, and most of the world’s investable capital sits outside that fence. You can tokenize an asset in an afternoon. Turning it into a global market takes a rail that global capital is allowed to use. So which rail comes next: public, private, or something built between them? Measured by size, the pilot is small. ₹1,025 crore is roughly $115 million, under 0.02% of the corporate bond market. UPI’s average daily transaction value in August was ₹96,205 crore, so the entire pilot equals about fifteen minutes of India’s retail payments. Size tells you very little here. A better way to read Demat 2.0 is through six questions. Who owns the asset? Who controls the ledger? Who controls the money? Who can see the transaction? Who can verify it? Who can participate? India has answered each of these with a deliberate design choice. Follow the answers and you arrive at the one question it has left open. What Actually Happened Issuer Type Amount REC State-owned power-sector lender ₹500 crore Larsen & Toubro Private engineering and construction group ₹500 crore IIFL Finance Non-bank lender (NBFC) ₹25 crore Total ₹1,025 crore The issuer mix is the first signal worth reading. A state-owned lender, a private conglomerate and an NBFC bring three different balance sheets, three investor bases and three ticket sizes. The first cohort tests the rail across the actual shape of Indian credit: public sector, private sector and non-bank lending. The bonds themselves kept everything that makes them bonds. According to SEBI’s FAQ, a tokenised bond remains a security under the Securities Contracts (Regulation) Act, 1956, and keeps the same ISIN, issuer obligations, coupon, maturity, covenants, rating, security and investor rights as a conventional dematerialised bond. The technology maintaining the ownership record is what changed. So who owns the asset? You do, through the account you already have. The Demat 2.0 account is an extension of the investor’s existing demat account, uses the existing KYC, and the depository remains the authoritative record of beneficial ownership. The first answer: ownership stays exactly where Indian law already places it. The Real Innovation Is Atomic Settlement Every securities trade has two legs. The buyer sends money. The seller delivers the security. In today’s markets, these legs run through separate systems, a depository for the bond and a bank payment system for the cash. Between them sits an interval, and during that interval one party has performed while the other has not. Clearing corporations, margin requirements and settlement guarantee funds exist largely to manage that gap. Demat 2.0 closes it. Investors link their demat account to a CBDC wallet at their own bank, issuers receive proceeds in a CBDC wallet, and the ledger links the securities and cash legs so that both settle or neither does. SEBI describes this as removing the interval between trade and settlement, along with the counterparty exposure that interval creates. The second change is quieter and may matter more over time. The coupon rate, payment dates, day-count convention and redemption terms are encoded into the token through a smart contract, so coupons and redemptions can execute automatically against the holdings recorded on the record date. Every corporate action that today needs instructions, reconciliation and follow-up across registrars, banks and depositories becomes a scheduled event on a shared ledger. Demat 1.0 turned a certificate into a database entry. Demat 2.0 turns that entry into an instrument that carries its own rules. Once rules execute on the ledger, a market moves from a system of records to a system of executable agreements. Who controls the money? The first answer is simple: the RBI issues the e₹ that settles every trade on this rail. Who Controls the Ledger Look at Demat 2.0 as a stack and the architecture becomes clear. The ledger is private and permissioned, built and operated by the market infrastructure institutions with technology support from NPCI. Initially, the nodes are run by the depositories and stock exchanges, with a later stage that may extend nodes to credit rating agencies, depository participants and other regulated entities. The depositories also hold and manage investors’ private keys. SEBI has not published the consensus mechanism. What it has published tells you who participates in consensus, and for now that is the more important fact. This is also where India’s claim to protect investor interest becomes concrete. Rating, debenture trustee, listing, disclosure and investment eligibility requirements all continue to apply, and any freeze or attachment on a demat account or ISIN extends to the linked tokenised holding. Every protection a bondholder had yesterday is carried onto the ledger by rule. The institutions able to break those protections are the same institutions already accountable for them. Who controls the ledger? The depositories own it and run it with the exchanges. India did not replace its financial infrastructure […]