SKN | India Plans First Tokenized Corporate Bonds Using Wholesale CBDC in September Pilot

Key Points:

• India is reportedly preparing its first tokenized corporate bond pilot, with state-controlled REC Limited expected to issue less than 5 billion Indian rupees ($57 million) of debt.
• Investors would use wholesale central bank digital currency (CBDC) to purchase the bonds, linking tokenized securities with central-bank-backed digital settlement.
• A new DEMAT 2.0 electronic securities wallet and a planned secondary market could provide an early test of how blockchain-based bonds integrate with India’s existing financial infrastructure.

India is preparing to test whether tokenized securities and central bank digital currency can operate together in the mainstream financial system, with a reported September pilot for corporate bonds. The initiative would place distributed ledger technology at the center of both securities ownership and settlement, giving investors a controlled environment to test faster digital transactions without replacing the country’s established financial infrastructure.

REC Limited, a state-controlled power infrastructure finance company, is expected to issue less than 5 billion Indian rupees, or about $57 million, in tokenized bonds, Reuters reported on Aug. 24, citing three people familiar with the plans. The pilot would initially be limited to selected investors and could be unveiled at an annual financial technology event in Mumbai.

CBDC and Tokenized Securities Connected

The proposed structure is notable because the bonds would reportedly be purchased using India’s wholesale CBDC rather than conventional bank settlement rails.

Investors would need two digital accounts: a wholesale CBDC wallet provided by a bank and a new electronic securities wallet. Indian securities depositories are developing the latter, known as DEMAT 2.0, which would record bond ownership using distributed ledger technology.

The Reserve Bank of India and the Securities and Exchange Board of India are reportedly working together on the initiative. That coordination is significant because tokenization requires more than putting an existing financial asset on a blockchain. The payment mechanism, legal ownership, custody and settlement processes must also operate consistently.

The pilot could therefore provide a practical test of whether blockchain infrastructure can reduce friction between securities settlement and payments while maintaining regulatory controls.

Three-Month Lockup, Secondary Market Planned

The bonds are expected to carry an initial three-month lockup period, limiting immediate trading after issuance. Exchanges are reportedly expected to develop a secondary market for the tokenized securities by December.

That timetable could give market participants an opportunity to evaluate whether tokenized bonds can eventually offer more efficient trading and settlement without sacrificing liquidity.

The relatively small proposed issuance also suggests that authorities are approaching tokenization incrementally. At roughly $57 million, the pilot is large enough to test institutional processes but remains limited compared with India’s broader corporate debt market.

For investors, the development is less about the size of the initial offering than the infrastructure being tested around it. A successful pilot could demonstrate how programmable securities, digital settlement and central-bank money might interact in a regulated market.

India Tests the Institutional Case for Tokenization

India’s initiative reflects a broader movement among financial institutions toward tokenized real-world assets. Government bonds, corporate debt and other traditional instruments are increasingly being examined as candidates for blockchain-based settlement, particularly where faster settlement and automated recordkeeping could improve operational efficiency.

The use of wholesale CBDC adds another dimension. Instead of relying on privately issued digital money or conventional commercial-bank settlement, the pilot would potentially connect tokenized assets directly with central-bank-backed digital payments.

The longer-term opportunity will depend on whether these systems can move beyond controlled pilots and achieve sufficient interoperability, liquidity and regulatory certainty. For now, India’s reported September experiment offers a closely watched test of whether tokenization can become practical financial infrastructure rather than simply a new format for existing securities.