Industry Odisha, Aug 24: State-owned power financier REC will issue less than Rs 500 crore of securities on distributed ledger technology, integrating the digital rupee for settlement.
India is poised to issue its first tokenised corporate bond next month, according to media reports, positioning the country among an emerging group of markets experimenting with blockchain-based securities issuance and settlement infrastructure.
The pilot programme will see REC Limited, the state-owned renewable energy financing company, issue tokenised bonds worth less than Rs 500 crore. According to Reuters, citing three sources with direct knowledge of the initiative, the offering is restricted to a select investor group whose identities remain undisclosed. The announcement is expected at a fintech industry event in Mumbai in September.
Tokenised bonds represent a structural departure from conventional securities. Rather than relying on physical certificates or centralised digital records, ownership, issuance, trading and settlement of tokenised bonds are recorded on blockchain or distributed ledger technology (DLT). This architecture enables transaction settlement in a matter of minutes or seconds rather than the standard two-business-day (T+2) cycle governing traditional securities markets.
The initiative marks a collaboration between India’s two principal financial regulators. Both the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) are jointly developing the framework, representatives said, as India accelerates its exploration of distributed ledger applications across the financial system.
A distinctive feature of the pilot is its integration with India’s central bank digital currency. Investors will use the digital rupee the RBI’s CBDC to purchase the tokenised bonds. This creates an unprecedented alignment of currency and securities infrastructure within a unified digital ecosystem. Participating investors must maintain two complementary digital accounts: a wholesale CBDC wallet provided by an authorised bank and a newly developed electronic securities wallet.
The electronic securities wallet, developed by Indian securities depositories, represents technology described by sources as “DEMAT 2.0.” The system employs distributed ledger technology to record and track bond holdings. “Subsequent trades can take place only between participants that hold both compatible CBDC and securities wallets,” according to one source quoted by Reuters. This compatibility requirement creates a self-contained digital market in which both payment settlement and securities transfer occur through integrated infrastructure rather than separate, disconnected systems.
The tokenised bonds will carry an initial three-month lock-in period, restricting investor redemptions during this window. Beyond this period, stock exchanges are developing a secondary market infrastructure, expected to be operational by December. Notably, these securities will not trade through existing electronic book provider platforms used for conventional bonds. Instead, specialised secondary-market infrastructure is being built to accommodate blockchain-based settlement workflows.
The broader objective is to assess whether distributed ledger infrastructure can enhance the operational efficiency of bond markets. Near-instant settlement through integrated digital systems promises to reduce settlement risk the possibility that one party to a transaction fails to deliver its obligation while streamlining the multiple operational steps required in conventional bond issuance and settlement.
The pilot extends India’s programme of digital financial infrastructure development. By testing how the CBDC interacts with tokenised securities and their associated wallets, regulators gain practical data on whether digital currency and blockchain-based asset ownership can function as complementary market infrastructure. The resulting evidence base could inform design decisions for broader adoption across India’s financial markets.
This development aligns with global precedent. Markets including the European Union, Hong Kong and others have launched tokenised bond pilots or issuance programmes, establishing proof-of-concept frameworks for blockchain settlement. India’s entry into this space reflects growing regulatory confidence that distributed ledger technology can address genuine operational bottlenecks in securities markets while introducing new risk-management capabilities.
The timing carries significance for India’s fintech sector and capital-markets infrastructure. The initiative demonstrates regulatory willingness to experiment with emerging technologies at scale, potentially creating a foundation for future tokenised issuances by corporate and government entities. It also tests the operational interaction between two nascent technologies digital currency and blockchain securities settlement that authorities expect to coexist within India’s future financial system.
