The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) launched “Demat 2.0” on Thursday — a pilot program to test the tokenisation of corporate bonds and quicker settlement using the central bank digital currency and blockchain technology.“It explores whether distributed ledger technology can bring the security and settlement legs closer together, enable faster settlement and automate parts of asset servicing,” SEBI Chairman Tuhin Kanta Pandey said while launching the initiative at the Global Fintech Fest in Mumbai.The initiative is being led by depositories such as the Central Depository Services Ltd (CDSL) and the National Securities Depositories Ltd (NSDL), exchanges like the BSE and the National Stock Exchange (NSE), banks such as the HDFC Bank and ICICI Bank, and the National Payments Corporation of India (NPCI).The pilot launched with 3 issuances, including a Rs 500 crore issue by Larsen & Toubro that attracted investors such as SBI, Axis Bank, SBI Mutual Fund, and NSDL, among others.While “Demat 1.0”, launched in 1996, digitised shares that were held in paper form until then, the latest avatar combines tokenised securities with digital settlement assets using smart contracts and settles through the CBDC. The project also focuses on preserving the legal certainty around ownership even as the market experiments with new technology and infrastructure, said Pandey.After bonds, the tokenisation exercise can be extended to other asset classes like equity, mutual funds, and gold. A few other debt instruments such as commercial papers and certificates of deposit already trade in a tokenised form using the unified markets interface and CBDC. In fact, RBI Executive Director P. Vasudevan said on Wednesday that the central bank is already exploring a gold tokenisation program.Tokenising financial assets means breaking down an asset into smaller pieces, making it accessible for the retail audience by reducing ownership cost. For example, a bond worth Rs 10 lakh apiece can be broken into smaller units so investors can buy a part for just Rs 100. It also means digitising assets, leading to stronger ownership records and shorter settlement times.India can shape global finance architecture, lead AI infraStory continues below this adAt the same event, RBI chief Malhotra said India has the opportunity to become a trusted partner in shaping the future architecture of global finance, adding that India’s fintech ecosystem already ranks third globally with 30 unicorns in the sector.The central bank is working on building digital public infrastructure for next-generation financial services, Malhotra said. “The ULI (unified payments interface) is an example of where we are trying to create common digital rails for frictionless, consent-based credit delivery.”Similar to the unified payments interface (UPI), the ULI was a digital infrastructure developed by the central bank aimed at democratising credit.While AI brings a lot of benefits and must be adopted as swiftly as possible, Malhotra also emphasised that it should be done in a manner that maintains the trust of consumers. AI can pose challenges like cyber threats, data privacy concerns, and erosion of human judgement, said Malhotra.Story continues below this ad“That responsibility goes beyond the balance sheet of the firm. Operational resilience, business continuity and cybersecurity are not burdens or costs to be minimised. They are the price of the scale a firm has achieved. A firm that engages transparently not only earns regulatory goodwill, but also finds a faster and more durable path to scale,” he said, addressing fintech representatives.On a similar note, SBI Chairman CS Setty said that banks’ AI integration has to be foolproof. “There is nothing like 99% accuracy here. You need to be 100% accurate, and every time, all the time, at population scale,” Setty said, speaking earlier during the day, at the same event.His comments came against the backdrop of banks moving towards integrating AI as an agent that can take independent actions, rather than being an assistive tool. Setty stressed on the importance of reliability as the new technology leads the next phase of transformation for the banking industry. He outlined the 3 A’s that are essential in AI adoption in the banking sector: accuracy, accountability, and affordability.