India is set to pilot its first tokenized corporate bonds in September, with REC Limited issuing debt settled via wholesale CBDC. The initiative aims to leverage blockchain technology for securities transactions.
This pilot represents India's move to integrate blockchain and CBDC into its capital markets, potentially streamlining bond issuance and trading processes and enhancing efficiency in financial transactions.
India is preparing to conduct a pilot program for tokenized corporate bonds in September, marking a significant step in its exploration of blockchain technology and central bank digital currency (CBDC) for financial markets. REC Limited, a state-controlled entity focused on power infrastructure finance, is slated to issue bonds valued at less than 5 billion Indian rupees (approximately $57 million).
The pilot will be accessible to a select group of investors who will utilize a wholesale CBDC for the purchase of these tokenized bonds. Participants will be required to maintain two digital accounts: one for wholesale CBDC, provided by a banking institution, and a new electronic securities wallet, referred to as DEMAT 2.0. This wallet is being developed by Indian securities depositories and will leverage distributed ledger technology to record bond holdings.
The initiative is a collaborative effort between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). The tokenized bonds are expected to have an initial lockup period of three months, with exchanges anticipated to establish a secondary market for them by December.