India to launch first tokenized corporate bond in September

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India to launch tokenized corporate bond

Highlights

REC plans India's first tokenized corporate bond.
The issue will be worth less than 5 billion rupees.
Settlement will use the wholesale digital rupee.
Investors will need CBDC and DEMAT 2.0 wallets.

According to Reuters, state-owned power financier REC is expected to issue tokenized bonds worth less than 5 billion rupees, or about $57 million. The offering is set to be limited to a select group of investors during the pilot stage, with the transaction expected to be unveiled at a major financial technology event in Mumbai in September.

India builds a blockchain bond framework

The initiative is being developed jointly by India's securities regulator and central bank as part of a broader effort to test distributed ledger technology in regulated finance. Tokenized bonds record ownership, issuance, transfers, and settlement digitally, reducing the time needed to complete transactions.

Investors in the REC issue will need access to two digital accounts. One will be a wholesale digital rupee wallet provided through a bank. The second will be a new securities wallet, known as DEMAT 2.0, designed to record bond holdings on a distributed ledger.

Only participants with compatible CBDC and securities wallets will be able to trade the instruments after issuance. The bonds are expected to carry an initial three-month lock-in period, while exchanges are working toward creating a secondary market by December.

The securities will sit outside the conventional electronic book provider system used for standard bond issuance.

Tokenization expands beyond RBI pilots

India has been building the underlying infrastructure for several years. The RBI launched its wholesale digital rupee pilot in November 2022, initially using the system to settle government securities transactions. A retail CBDC pilot followed the next month.

By October 2025, the central bank had expanded experimentation into tokenized deposits within the wholesale digital currency framework. Tokenization of commercial paper and other money-market instruments has also been under consideration.

The planned REC transaction would extend that work into corporate debt, bringing blockchain-based issuance and CBDC settlement together in a live securities transaction.

A new track for regulated digital finance

The pilot matters because India is drawing a clear distinction between blockchain-based financial infrastructure and speculative cryptocurrencies. Regulators remain cautious toward private digital assets and stablecoins while showing greater willingness to use distributed ledgers for regulated securities.

If the REC issue proves workable, tokenization could reduce settlement times, improve post-trade efficiency, and open the door to broader use across corporate bonds and other fixed-income instruments. The larger test will be whether the infrastructure can scale beyond a controlled pilot and attract meaningful institutional participation.

We also reported India's moves to isolate the banking sector from cryptocurrencies.

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