The Securities and Exchange Board of India (SEBI) is stepping up the use and oversight of emerging technologies in the securities market, with plans to implement a global supervisory toolkit for artificial intelligence and pilot tokenised corporate bonds, chairman Tuhin Kanta Pandey said on Thursday.
The market regulator is currently working to implement the International Organization of Securities Commissions’ (IOSCO) supervisory toolkit for AI in the Indian securities market to strengthen risk management and develop an agile AI governance framework, Pandey said at the Global Fintech Fest 2026. The regulator had earlier said the IOSCO toolkit would be integrated into its AI strategy for regulated entities.
SEBI and the Reserve Bank of India (RBI) also launched Demat 2.0 at the event, aimed at enabling atomic settlement and automating parts of asset servicing.
Pandey said the project brings together tokenised securities, digital settlement assets through the central bank digital currency (CBDC) and smart contracts while building on existing market infrastructure and preserving legal certainty around ownership. Demat 2.0 will be connected to the RBI’s wholesale CBDC through its Unified Market Interface (UMI), allowing securities and funds to be settled simultaneously.
The technology is also expected to automate asset-servicing functions such as interest payments and redemptions through smart contracts. Currently, issuers or their registrars have to obtain the list of bondholders from depositories, calculate payments and route them separately through the banking system. Under the shared ledger, bondholder details will be available to authorised institutions simultaneously, while payments through CBDC can be credited to bondholders’ wallets on the due date.
In the pilot phase, three issuers — REC Limited (Rs 500 crore), L&T Limited (Rs 500 crore) and IIFL (Rs 25 crore) — have issued tokenised corporate bonds worth an aggregate Rs 1,025 crore. The initial phase will be restricted to institutional investors, with retail investors expected to be included later.
SEBI said the mechanism could enable faster settlement while reducing file sharing, reconciliations and validations by market intermediaries, besides lowering settlement risk.