India Launches First Tokenized Corporate Bonds Pilot Using CBDC

India is set to launch its first tokenized corporate bonds in September as part of a pilot involving blockchain-based transactions settled using a central bank digital currency (CBDC). The pilot, which will initially be open only to a select group of investors, could be unveiled at an annual financial technology event in Mumbai in September. REC Limited, a state-controlled Indian power infrastructure finance company, plans to issue less than 5 billion Indian rupees ($57 million) in tokenized bonds.

The pilot will utilize India's central bank digital currency (CBDC) to buy the tokenized bonds. Investors will need two digital accounts to participate: a wholesale CBDC wallet provided by a bank and a new electronic securities wallet called DEMAT 2.0, which will record bond holdings using distributed ledger technology.

The Reserve Bank of India (RBI), the country's central bank, and the Securities and Exchange Board of India (SEBI), its markets regulator, are working together on the initiative. The bonds will have an initial three-month lockup period, and exchanges are expected to develop a secondary market for the tokenized bonds by December.