India is set to introduce its inaugural tokenized corporate bonds in September, marking a significant step toward integrating blockchain technology into the country’s debt markets for near-instant transaction settlements. According to multiple sources familiar with the plans, this pilot initiative will be led by REC Ltd, a state-owned financing company focused on the power sector.
Tokenized bonds represent a modern approach in which the ownership records, issuance process, trading activity, and final settlement of securities are all maintained on a blockchain or distributed ledger system.
This digital framework allows deals to conclude almost immediately, in contrast to traditional timelines that can span days.
By adopting this method, India positions itself among pioneering markets like those in Europe and Hong Kong that have already experimented with similar technology for bond-related activities.
The collaboration between the Securities and Exchange Board of India and the Reserve Bank of India underpins the effort, as both institutions work to advance the underlying technology.
REC plans to offer these specialized bonds in an amount under 5 billion rupees, equivalent to roughly 57 million dollars.
The launch is anticipated to be highlighted during a major annual financial technology gathering scheduled for Mumbai in the coming month.Purchases of the bonds will rely on India’s central bank digital currency, the digital rupee.
Access during the initial phase will be restricted to a carefully chosen set of investors, ensuring a controlled testing environment.
Specific participant identities remain undisclosed at this stage.
To participate, investors must maintain two distinct digital accounts.
One is a wholesale digital currency wallet issued through a banking partner, while the other is a newly developed electronic securities wallet.
Indian depositories are creating this innovative tool, known as DEMAT 2.0, which will track bond ownership via distributed ledger technology.
Future transactions will be limited exclusively to parties equipped with matching and compatible versions of both the digital currency and securities wallets.
The bonds will carry a preliminary three-month holding restriction.
Market exchanges are projected to establish a secondary trading venue for these instruments by the end of the year.
Notably, the securities will operate outside the standard electronic book provider systems currently used for conventional bond deals.
Officials from the central bank, the market regulator, and REC have not provided public statements on the matter. This pilot represents an important experiment in enhancing efficiency, transparency, and speed within India’s corporate bond ecosystem, potentially paving the way for broader adoption of distributed ledger solutions in financial markets.
