India to Issue First Tokenized Corporate Bonds Settled in Digital Rupee

India has set plans to launch its first tokenized corporate bonds next month through an issue by state-owned power financier REC, with the wholesale digital rupee settling transactions on blockchain-based infrastructure, crypto.news reported, citing Reuters.

The pilot

Reuters reported on Aug. 25, citing three people with direct knowledge, that REC will issue the bonds — worth less than 5 billion rupees, or about $57 million — as part of a pilot developed with the Reserve Bank of India and the Securities and Exchange Board of India. The test aims to show whether distributed-ledger technology can shorten the process of issuing, recording and settling corporate debt. Access will initially be restricted to a limited group of investors while regulators test the system, and the offering is expected to be unveiled during an annual fintech event in Mumbai next month.

Two wallets per participant

Participants will need two digital accounts: a wholesale central bank digital currency wallet supplied by a bank, and a securities wallet built by India’s depositories under a system called DEMAT 2.0 that records tokenized bond holdings on a distributed ledger. Using the RBI’s wholesale digital rupee for the cash side would let money and securities move across connected digital infrastructure, bypassing the conventional electronic book provider used for debt placements.

Timeline and context

The bonds carry an initial three-month lock-in, and exchanges are expected to develop a secondary market for tokenized bonds by December. The launch follows groundwork disclosed in May, when SEBI Chairman Tuhin Kanta Pandey said the regulator had approved a limited test of distributed-ledger technology for corporate bond trading and settlement and estimated implementation could take six to nine months. India’s corporate bond market is estimated at nearly 59 lakh crore rupees, though secondary trading remains limited because many institutional buyers hold debt to maturity. The bonds will remain regulated corporate securities, with blockchain used to record and transfer holdings. The pilot enters a market SEBI has already identified as an area where distributed ledgers could be tested for settlement efficiency, with DLT already used in areas including covenant monitoring and depository functions.

The pilot is a concrete example of how blockchain networks connect financial infrastructure.