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Demat 2.0 can allow investors to receive tokenised bonds instantly against payments made through the central bank digital currency (CBDC), significantly reducing the time gap in securities settlement, NSDL Managing Director Vijay Chandok has said, noting that wider trading will depend on regulatory approval and market readiness.
Speaking with ANI on the sidelines of the Global Fintech Fest 2026 in Mumbai, Chandok said the initiative uses an atomic settlement mechanism where the transfer of the security and payment take place simultaneously. You give and take money instantly. You give your money instantly. And so settlement cycle is instant, Chandok said. Demat 2.0, a pilot project for tokenised corporate bonds, was announced on Thursday at the Global Fintech Fest by Reserve Bank of India Governor Sanjay Malhotra and Securities and Exchange Board of India Chairman Tuhin Kanta Pandey. The pilot is designed to test the issuance, holding, trading and settlement of corporate bonds as digital tokens using Distributed Ledger Technology (DLT). It is linked to the RBIs wholesale CBDC infrastructure for settlement of the money leg of transactions. Chandok said the system consists of two wallets - a securities wallet containing the bond tokens and a currency wallet containing the digital rupee. The whole configuration has got two wallets, a securities wallet and a currency wallet. The securities wallet houses the tokens and the currency wallet houses the central bank digital currency, the rupee CBDC, he said. Explaining how the process works, Chandok said once bond tokens are allocated to an investor, the transfer of the security and payment can take place simultaneously over the digital network. It is an instantaneous, a delivery versus payment mechanism of settlement where the investor parts with his money and immediately he gets the securities into his demat account, Chandok said. He contrasted this with the conventional system, where there is a time gap between payment and receipt of securities. In the traditional model, you give the money today, you'll get the bond tomorrow. So one day locking in of money now gets replaced by an instant availability of security, he said. Chandok, however, stressed that Demat 2.0 is currently in pilot mode and secondary-market trading in the tokenised bonds is not yet available. These are for investors, not traders, he said. He added that as the system matures and moves into production mode, investor participation and the ability to buy and sell would depend on regulations and the depth of the secondary market. It requires acceptance, requires maturity and it requires regulation, Chandok said. He also said the existing Demat system would continue to operate, while Demat 2.0 brings the additional capability of simultaneous settlement. The difference is this is instantaneous. You give and take simultaneously, he said, adding that the mechanism lowers settlement risk by removing the time lag between the two sides of a transaction. (ANI)
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