India to Introduce First Tokenised Bond Issue with REC Pilot in September
India is preparing to test blockchain technology in its debt market through the planned rollout of its first tokenised corporate bond issue in September. The pilot offering, managed by state-run power financing firm REC, aims to evaluate whether distributed ledger systems can deliver near-instant transaction settlements and improve operational speed across the corporate bond sector.
What Happened
State-owned financier REC is scheduled to introduce a tokenised bond pilot valued at under Rs 500 crore ($57 million), according to people familiar with the development reported by Reuters. The initiative is set to be presented at an annual financial technology conference in Mumbai next month and will be made available exclusively to a select group of participants whose identities have not been disclosed.
The pilot is being developed jointly by the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI). As framework discussions remain underway, regulatory details may still be refined. Representatives for the RBI, Sebi, and REC did not provide comment on the upcoming launch.
Key Highlights
- Pilot Value: The test bond offering by REC will total less than Rs 500 crore ($57 million).
- Blockchain Architecture: Ownership, issuance, trading, and final settlement will be maintained digitally on a distributed ledger.
- Payment via CBDC: Investors will use India’s wholesale central bank digital currency (CBDC) to purchase the bonds.
- Dual-Wallet Mechanism: Participants must hold a bank-issued wholesale CBDC wallet alongside a new electronic securities wallet dubbed DEMAT 2.0, developed by Indian depositories.
- Three-Month Lock-In: The securities will feature a mandatory three-month initial holding period, with stock exchanges working to establish a dedicated secondary trading venue by December.
- Non-Traditional Trading: The tokenised instruments will bypass the standard electronic book provider platforms used for typical bond sales.
Why This Matters
Tokenised bonds represent securities where issuance, record-keeping, and transfers take place on a blockchain rather than through traditional clearing and settlement channels. By executing this trial, India aligns its capital market infrastructure with international jurisdictions such as Europe and Hong Kong, which are actively testing distributed ledger platforms for fixed-income products.
The trial provides domestic authorities and market participants an opportunity to run an integrated test combining central bank digital currency payments, new DEMAT 2.0 digital custody tools, and direct ledger settlements to determine if traditional settlement delays can be substantially reduced.
What to Watch Next
Following the expected unveiling in September, the pilot bonds will enter an initial three-month lock-in window. Domestic stock exchanges are projected to introduce a functioning secondary market framework by December, enabling eligible participants who maintain compatible CBDC and securities wallets to conduct secondary trades.
Frequently Asked Questions
What are tokenised bonds?
Tokenised bonds are debt securities whose issuance, trade verification, ownership records, and settlements are managed digitally on a blockchain or distributed ledger network rather than via traditional registry databases.
How will investors purchase these bonds?
Investors will complete purchases using India’s wholesale central bank digital currency (CBDC). Participation requires two accounts: a bank-provided wholesale digital currency wallet and a specialized securities wallet known as DEMAT 2.0.
Can any investor trade these bonds immediately?
No. The pilot is restricted to a select investor group, features a mandatory three-month lock-in period, and will only be open to secondary market trades among entities possessing compatible CBDC and electronic securities wallets once exchange mechanisms are built.
Source: Based on reporting from Reuters via India Today.