India set to pilot first tokenised bond through REC

India is preparing to issue its first tokenised bond in September through state-owned power financier REC, marking a significant step in the country’s adoption of blockchain-based financial infrastructure.

The offering is expected to be below ₹5 billion, with regulators and the Reserve Bank of India jointly advancing the pilot. Both the issuance and settlement of the bond are expected to take place using blockchain technology.

The three-month bond is likely to be launched during an annual fintech conference in Mumbai in September and will initially be available to a limited group of investors.

Investors will participate through wholesale central bank digital currency (CBDC) wallets and electronic securities wallets. India’s depository is also developing an e-wallet, known as DEMT 2, to record bond holdings on a distributed ledger.

Secondary trading will initially be restricted to investors holding compatible CBDC and securities wallets. A tokenised bond secondary market is expected to emerge by December, while the instrument is not expected to trade on conventional electronic trading platforms.

The pilot could provide a significant test of how CBDC, blockchain-based securities settlement and tokenised financial assets can operate together within India’s financial system.