India Plans To Launch First Tokenised Corporate Bond Issue In September

India is planning its first tokenised bond issue in September as it tests blockchain technology for the issuance and settlement of bond transactions. The proposed offering is expected to be a pilot involving a limited group of investors.

Rural Electrification Corporation (REC), a government-owned power sector financier, is expected to issue the tokenised bonds, according to Reuters. The issue is likely to be worth less than Rs 500 crore and could be unveiled at an annual financial technology event in Mumbai next month, one of the sources cited in the report said. The proposed bonds would use blockchain technology for their issuance and settlement. The move would place India among markets such as Europe and Hong Kong that are using the technology for bond transactions.

India’s central bank digital currency (CBDC), the digital rupee, will be used to purchase the tokenised bonds, according to the report. The offering is expected to be available only to a select group of investors during the pilot stage. Reuters could not ascertain the names of the investors.

The proposed framework will require investors to use two digital accounts. One will be a wholesale digital currency wallet provided by a bank, while the other will be a new electronic securities wallet.

The tokenised securities will not be traded through the conventional electronic book provider platform, according to the sources. Instead, the proposed system will use blockchain-based infrastructure for the issuance and settlement of the bonds. The pilot comes as India explores the use of blockchain technology in its bond market. The proposed arrangement will allow investors to use the digital rupee to purchase the tokenised bonds, while a separate electronic securities wallet will be used for the securities.

According to the Reuters report, the proposed offering would be India’s first tokenised bond issue. Details about the timeline and framework had not been reported previously. The pilot is expected to remain limited in scale, with the issue size below Rs 500 crore.

The proposed issue would place India among markets exploring the use of blockchain technology for bond issuance and settlement, while allowing authorities and market participants to test the framework through a limited offering.