RBI and SEBI Unveil Demat 2.0 Corporate Bond Tokenisation Pilot and Recognise UFF as Second Fintech SRO

In a major leap forward for India's digital capital markets and fintech governance, Reserve Bank of India (RBI) Governor Sanjay Malhotra and Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey jointly unveiled "Demat 2.0"—a regulator-backed pilot for tokenised corporate bonds. Speaking at the Global Fintech Fest in Mumbai, the central bank also announced the formal recognition of the Unified Fintech Forum (UFF) as the country's second self-regulatory organisation for the fintech sector (SRO-FT).

The dual announcements mark a coordinated push by India's primary financial regulators to modernise capital market settlement architecture while strengthening self-policing standards among rapidly scaling digital lenders and technology platforms.

Demat 2.0: Instant Settlement Through Wholesale CBDC

Thirty years after India transitioned from paper share certificates to electronic book entries under "Demat 1.0" in 1996, Demat 2.0 establishes a new market infrastructure using Distributed Ledger Technology (DLT). Under this pilot, corporate bonds are natively issued as digital tokens on a shared ledger maintained by market infrastructure institutions, primarily depositories like the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).

The tokenised bond ledger connects directly to the RBI’s wholesale Central Bank Digital Currency (CBDC) via the Unified Market Interface (UMI). This architecture enables "atomic settlement"—the simultaneous transfer of money and securities in real time—eliminating counterparty settlement lag and slashing reconciliation overheads.

Key Pilot Issuances and Technical Highlights:

• State-run Power Financier REC: Raised ₹500 crore (comprising a base issue of ₹100 crore and a greenshoe option of ₹400 crore) in tokenised bonds maturing on May 31, 2028, at a coupon of 7.30%.
• Larsen & Toubro (L&T): Issued ₹500 crore in tokenised corporate debt maturing in three years at a 7.40% coupon, drawing participation from institutional investors including State Bank of India, Axis Bank, and SBI Mutual Fund.
• Lifecycle Automation: Smart contracts embedded within the tokenised structure automate coupon servicing, interest payouts, and eventual principal redemptions.

While the pilot initially targets corporate debt, regulators indicated that the framework will eventually expand to encompass equities, mutual fund units, and electronic gold receipts.

Unified Fintech Forum Recognised as Second SRO

Expanding on the regulatory architecture for non-bank fintechs, RBI Governor Malhotra confirmed that the Unified Fintech Forum (UFF)—formerly known as the Digital Lenders Association of India (DLAI)—has been recognised as an SRO-FT.

UFF joins the Fintech Association for Consumer Empowerment (FACE), which was approved in August 2024 as the inaugural fintech SRO. As of mid-2026, UFF represents 118 member institutions spanning non-banking financial companies (NBFCs), loan service providers (LSPs), account aggregators, and credit rating agencies.

Mandate and Responsibilities of the SRO:

• Setting, monitoring, and enforcing self-regulatory standards and ethical codes of conduct across digital lending and payments.
• Establishing standardised dispute-resolution frameworks and enhancing customer grievance redressal mechanisms.
• Acting as a structured two-way conduit between industry participants, the RBI, and government policymakers to preempt systemic risks.

Addressing attendees, Governor Malhotra reminded fintech founders that innovation cannot exist without trust, urging companies to treat customer data as a fiduciary responsibility rather than a commercial asset to be exploited.

Market Implications for Indian Investors and Corporates

The corporate bond market in India has long contended with structural illiquidity and high ticket sizes that keep secondary retail participation minimal. Demat 2.0 addresses these friction points by lowering administrative costs, speeding up settlement cycles, and enabling fractionalisation.

For institutional issuers and domestic corporate treasuries, the ability to issue debt natively on DLT with automated servicing provides faster access to liquidity and substantially lower issuance friction. Coupled with a structured self-regulatory environment under UFF, the initiatives collectively lay the groundwork for a safer, faster, and more transparent Indian financial ecosystem.

Tags: Reserve Bank of India SEBI Corporate Bonds CBDC Unified Fintech Forum Larsen and Toubro