REC Ltd has raised Rs. 500 crore through India’s first pilot issue of tokenized corporate bonds, marking a major test of blockchain-based securities infrastructure in the country.
The issue was conducted under the Securities and Exchange Board of India’s (SEBI) Regulatory Sandbox Framework. It attracted bids worth Rs. 796 crore, carried a 7.30% coupon and had a tenor of one year and nine months. Pay-in, allotment and listing were completed on the same day.
What is a Tokenized Bond?
According to the Bank for International Settlements (BIS), a tokenized bond is still a conventional debt security, but its ownership or economic rights are represented digitally on a programmable ledger.
It does not become cryptocurrency. The issuer, coupon, maturity and legal obligations remain the same. The main difference is how ownership, transfers and settlement instructions can be represented and processed.
Sidharth Sogani Jain, founder, CEO and fund manager at Blue Aster Capital and CREBACO Global said, “India’s existing corporate bond market is not a broken system that tokenization needs to fix. Instead, tokenization could add programmability to the existing infrastructure and potentially make settlement faster.”
How is it Different From a Demat Bond?
Dematerialisation replaced physical certificates with electronic records. Tokenization goes further by allowing the security to exist on a programmable ledger.
According to BIS, tokenization can combine messaging, reconciliation and asset transfer within a common infrastructure instead of relying on several separate systems.
Atomic Settlement Could be the Biggest Change
REC’s pilot used the Reserve Bank of India’s wholesale central bank digital currency for the payment leg.
The bond transfer and payment were linked through delivery-versus-payment, or DvP. This creates the possibility of atomic settlement, where the security moves only if payment moves simultaneously.
REC said the structure introduced atomic DvP while providing greater transparency through a shared ledger.
What Could Tokenization Improve?
Potential benefits include faster settlement, lower reconciliation requirements, programmable interest or redemption processes and shared transaction records.
However, tokenization does not automatically create liquidity or expand retail access. REC’s issue remained a permissioned institutional pilot.
The World Bank has also highlighted interoperability, smart-contract vulnerabilities and regulatory uncertainty as potential risks.
Also Read: India’s First Tokenized Bond: What REC’s Pilot Means For Investors
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