India is set to launch tokenised corporate in September, testing blockchain technology to enable instant settlement of bond transactions. State-owned power financier REC is expected to issue the bonds for the first time, according to a Reuters report dated 24 August.
Here’s what retail should know about this new opportunity.
What are tokenised corporate bonds?
Vikaas M Sachdeva, CEO, BitDelta India explained that “tokenised bonds are conventional corporate bonds whose ownership and settlement records are maintained on a distributed ledger rather than through the traditional multi-step process”.
He said the underlying instrument remains a bond issued by a company such as REC, it carries the same credit exposure, interest payments and principal repayment. Only the ownership and settlement infrastructure changes, enabling faster, potentially near-instant settlement.
For retail investors, this could eventually mean greater efficiency, transparency and accessibility. However, the pilot is limited to select participants, he added.
The September launch and three-month lock-in are based on media reports, not a formal regulatory announcement. Participating investors may not be able to sell immediately, Sachdeva added.
How are they different from conventional corporate bonds and crypto?
Nishchay Nath, Founder & CEO, BondScanner explained that “conventional bonds use existing securities-market infrastructure for ownership and settlement, while tokenised bonds use a blockchain or distributed ledger, potentially enabling near-instant settlement”.
Tokenised bonds are not cryptocurrencies. A tokenised bond represents a regulated financial security with a defined claim on the issuer, while cryptocurrency is a digital asset in itself. Tokenisation uses blockchain to digitally represent an existing real-world financial asset, Nath added.
However, Sachdeva said that with tokenization, the ownership record sits on a distributed ledger and payment is expected to move through the Reserve Bank’s wholesale digital rupee, not the retail Digital Rupee app used by the public.
How can retail investors access tokenised corporate bonds?
Sachdva explained that SEBI first announced this pilot publicly in May, saying implementation could take six to nine months on a limited scale. The September pilot is expected to involve REC and be available only to a select group of investors, not structured as a broad retail offering.
“Retail eligibility criteria and minimum investment amounts have not been announced, he added.
“The first Indian issuance is a pilot and is expected to be restricted to a select group of investors, so it should not be viewed as a retail launch yet,” Nath noted.
What accounts will investors need?
Selected participants in the pilot are expected, according to current reporting, to need two accounts, Sachdeva said.
The first is a wholesale digital currency wallet provided through a bank for making payments in the Reserve Bank’s wholesale CBDC. The instrument already handles government securities settlement and inter-bank lending. This is different from the retail Digital Rupee wallet, he added.
The second is a new securities wallet being developed by the depositories, referred to as “DEMAT 2.0”. It will record the bond holdings on the distributed ledger, Sachdeva said.
“For the current pilot, investors are expected to need two digital wallets,” Nath said. This is quite different from today’s retail experience, where an investor can largely use a bank account and demat account to transact in bonds, he added.
Will tokenised bonds trade on exchanges?
Secondary trading in tokenised bonds is expected to happen through exchanges over time, only between participants who hold the compatible wallets, and only after the reported lock-in period, Sachedva said.
However, Nath said these bonds also aren’t expected to trade on exchanges the way listed securities do.
How are tokenised corporate bonds being treated globally?
In markets such as Europe and Hong Kong, tokenised bonds have largely begun as institutional or selective exercises, Sachdeva said.
“India also starts from a stronger base than many markets attempting this, since NSDL and CDSL have run blockchain-based systems for bond-covenant monitoring since the framework was announced in 2021 and became operational in 2022,” he added.
Countries such as Hong Kong, Singapore and several European markets have already experimented with blockchain-based bonds, Nath said.
India is now testing a similar model within its own regulatory and financial-market framework, he added.
“Some of the largest tokenised bonds provide access to short-term US government debt instruments such as T-bills”, said Manhar Garegrat, Country Head, India & Global Partnerships, Liminal Custody.
India’s REC issuance is one of the few notable corporate bond offerings alongside the Siemens corporate bond in Germany and the Keyrock on-chain corporate bond in Switzerland. The benefits for India could include higher retail participation in debt instruments and higher liquidity for investors to make timely exits, Garegrat said.