India set to launch first tokenised corporate bonds in September pilot
State-owned power financier REC will lead a pilot issuance of less than 5 billion rupees, testing blockchain technology for instant settlement alongside India’s central bank digital currency.
India is preparing to issue its first tokenised corporate bonds in September, a move that would place the market alongside Europe and Hong Kong in the use of blockchain technology for issuance and settlement. The pilot is to be led by state-owned power financier REC, with the offering valued at less than 5 billion rupees, or approximately $57 million.
According to three sources with direct knowledge of the matter, the initiative aims to test the use of distributed ledger technology to enable the near-instant settlement of bond transactions. Tokenised bonds are securities whose ownership, issuance, trading and settlement are recorded digitally, allowing for significantly faster transaction completion compared to traditional methods.
The offering is expected to be unveiled at an annual financial technology event in Mumbai. It will initially be available to a select group of investors during the pilot stage, although the specific names of these participants have not yet been ascertained. The central bank, the markets regulator and REC did not respond to emails seeking comment on the development.
To purchase the bonds, investors will need to access two specific digital accounts: a wholesale digital currency wallet provided by a bank and a new electronic securities wallet known as DEMAT 2.0. Indian depositories NSDL and CDSL are developing this e-wallet, which will record bond holdings on a distributed ledger chain.
The bonds will carry an initial three-month lock-in period. Exchanges are expected to develop a secondary market for these tokenised securities by December, with subsequent trades taking place only between participants holding both compatible central bank digital currency and securities wallets. The securities will not be traded on the conventional electronic book provider platform.
India’s markets regulator and central bank are collaborating to push the technology forward. The sources, who spoke on the condition of anonymity as discussions remain ongoing and confidential, indicated that this move represents a significant step in modernising India’s capital markets infrastructure.
