India has set plans to launch its first tokenized corporate bonds next month through an REC issue of less than 5 billion rupees ($57 million), with the digital rupee set to settle transactions on blockchain-based infrastructure.
Summary
- India will launch its first tokenized corporate bonds next month through state owned REC.
- The offering will be worth less than 5 billion rupees, or about $57 million.
- Investors will use wholesale digital rupee and DEMAT 2.0 wallets to complete transactions.
- The bonds will have a three month lock in, with secondary trading expected by December.
Reuters reported on Aug. 25, citing three people with direct knowledge of the matter, that state-owned power financier REC will issue the bonds as part of a pilot being developed with the Reserve Bank of India and the Securities and Exchange Board of India.
The planned issuance will test whether distributed ledger technology can shorten the process of issuing, recording and settling corporate debt. Ownership and transaction records will be maintained digitally, allowing settlement to take place almost immediately once the required assets move between participants.
One person familiar with the plans told Reuters that the offering is expected to be unveiled during an annual financial technology event in Mumbai next month. Access will initially be restricted to a limited group of investors while regulators test the system.
“The offering would be made available to only a select group of investors at the pilot stage,” the person said.
Reuters could not determine which investors will participate. The RBI, SEBI and REC did not respond to requests for comment.
Tokenized corporate bonds will settle using India’s digital rupee
Participants in the pilot will need two separate digital accounts, according to Reuters’ sources. One will be a wholesale central bank digital currency wallet supplied by a bank, while the second will hold the tokenized securities.
India’s depositories are developing the securities wallet under a system called DEMAT 2.0, which will record investors’ bond holdings using distributed ledger technology. Subsequent transactions will only be possible between investors equipped with compatible securities and wholesale CBDC wallets, one source said.
Using the RBI’s wholesale digital rupee for the cash side of the transaction would allow the transfer of money and securities to occur across connected digital infrastructure. The setup is designed to test settlement without routing the bonds through the conventional electronic book provider system used for debt placements.
The planned launch follows regulatory groundwork disclosed earlier this year. On May 27, crypto.news reported on SEBI’s pilot after Chairman Tuhin Kanta Pandey said the regulator had approved a limited test of distributed ledger technology for corporate bond trading and settlement.
Pandey said at the time that the RBI was working on guidelines needed for the project, while SEBI and exchanges were prepared to proceed once the central bank completed its part of the framework. He estimated that implementation could take six to nine months as regulators worked through the operational requirements.
The May announcement did not identify an issuer or specify how the cash leg of the transactions would work. Reuters’ latest report identifies REC as the first issuer and says the wholesale digital rupee will be used to purchase the securities.
REC bond pilot will test a new securities wallet
Under the proposed structure, the bonds will carry an initial three-month lock-in period, Reuters reported. Exchanges are then expected to develop a secondary market for tokenized bonds by December, according to one of the people familiar with the plans.
A secondary market would allow eligible participants holding both required wallets to trade the securities after the lock-in ends. The system would retain the bond’s ownership record on the distributed ledger as securities move between approved investors.
National Securities Depository Limited and Central Depository Services Limited did not immediately respond to Reuters’ requests for comment about the DEMAT 2.0 infrastructure.
The pilot enters a corporate bond market that SEBI has already identified as an area where distributed ledgers could be tested for settlement efficiency. During the May announcement, Pandey said DLT was already being used in areas including covenant monitoring and depository functions.
Industry estimates cited in the earlier tokenization report placed India’s corporate bond market at nearly 59 lakh crore rupees. Secondary-market activity has remained limited because many institutional buyers hold debt until maturity, while retail participation remains comparatively low.
Tokenized securities create a digital representation of ownership in an underlying financial instrument. In the REC pilot, the bonds will remain regulated corporate securities, with blockchain or distributed ledger infrastructure being used to record and transfer the holdings.
RBI has separated regulated tokenization from private crypto
India’s use of blockchain for regulated securities is developing alongside a more restrictive policy toward cryptocurrencies and privately issued stablecoins.
On July 3, a report on RBI policy said the central bank had recommended keeping banks and payment systems insulated from cryptocurrencies while India continued reviewing its digital asset policy.
The RBI also reportedly told lawmakers that tokenized government securities, corporate bonds and other regulated financial assets should be distinguished from cryptocurrencies so restrictions directed at speculative digital assets do not interfere with regulated tokenization projects.
India has already been experimenting with central bank money in digital form. The RBI launched its wholesale CBDC pilot in November 2022, initially using the e₹-W system for settlement of government securities transactions. A retail digital rupee pilot followed in December 2022.
By October 2025, the central bank had extended that work to another form of tokenization. A CBDC-linked deposit pilot was launched within the wholesale digital currency system with a limited group of banks, while RBI officials said tokenization of commercial paper and other money-market instruments was also being examined.
The REC transaction would take the experiments into corporate debt issuance while using the wholesale CBDC as the settlement asset.
India is testing blockchain across regulated assets
Other Indian authorities have also started examining tokenization outside the bond market.
On July 21, Maharashtra Chief Minister Devendra Fadnavis directed officials to prepare draft legislation for the proposed Maharashtra Digitisation and Exchange of Land Token Asset Act. The property tokenization proposal would create a legal framework for recording and exchanging tokenized interests tied to immovable property through blockchain technology.
An expert committee involving representatives from SEBI, the Bombay Stock Exchange and the National Stock Exchange was tasked with developing the framework, according to the state announcement.
For the REC pilot, however, investors will operate inside infrastructure overseen by India’s financial regulators and market institutions. Reuters’ sources said eligible participants will need both the wholesale CBDC wallet and compatible DEMAT 2.0 securities wallet before they can conduct subsequent trades.
Following the initial three-month lock-in, exchanges are expected to have secondary-market infrastructure for the tokenized bonds in place by December, one of the sources told Reuters.
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