India is preparing to test tokenised corporate bonds in September, with REC expected to become the first issuer. The pilot will use blockchain and the Reserve Bank of India’s wholesale central bank digital currency (CBDC) for faster settlement.
How Tokenised Bonds Work
Vikaas M Sachdeva, CEO of BitDelta India, explained that “tokenised corporate bonds are conventional corporate bonds whose ownership and settlement records are maintained on a distributed ledger rather than through the traditional multi-step process”.
The security remains a corporate bond, carrying credit exposure, coupon payments and principal repayment obligations. What changes is the infrastructure used to record ownership and settle transactions.
According to reports, the REC pilot may include a three-month lock-in, though this has not been formally announced by regulators.
How They Differ From Crypto
Nishchay Nath, Founder and CEO of BondScanner, said 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”.
Unlike cryptocurrencies, tokenised bonds represent regulated securities with a claim on the issuer. Payments are expected to move through the RBI’s wholesale digital rupee rather than the retail Digital Rupee app.
What Investors May Need
According to Sachdeva, selected participants are expected to require two accounts. One would be a wholesale CBDC wallet provided through a bank, while the second would be a securities wallet being developed by depositories, referred to as ‘DEMAT 2.0’.
“For the current pilot, investors are expected to need two digital wallets,” Nath said. Retail eligibility criteria and minimum investment amounts have not been announced.
Why the Pilot Matters
The pilot is expected to remain limited, so it should not be treated as a broad retail launch. India already has blockchain experience in debt markets. According to Sachdeva, NSDL and CDSL have operated blockchain-based bond-covenant monitoring systems since 2022.
If successful, tokenisation could improve settlement speed, transparency and liquidity. For retail investors, the opportunity may come later, once regulators define eligibility, trading access and wallet requirements.
Also Read: India’s First Tokenized Bond Pilot Will Use Wholesale Digital Rupee Wallets
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