India Prepares to Launch Tokenized Corporate Bonds Pilot Using CBDC

India is planning to test the issuance of tokenized corporate bonds, with a pilot expected to begin as early as September. The initiative centers on blockchain-based bond transactions that would be settled using India's central bank digital currency (CBDC), according to Reuters.

The pilot will involve REC Limited, a state-controlled power infrastructure finance company, which plans an initial bond issuance of less than 5 billion Indian rupees (about $57 million). Investors may need two separate digital accounts: a wholesale CBDC wallet and a new electronic securities wallet. The development of 'DEMAT 2.0' by Indian securities depositories will record bond holdings using distributed ledger technology.

Tokenized corporate bonds would be bought using India's central bank digital currency, with participating investors required to hold two digital accounts. One would be a wholesale CBDC wallet provided by a bank, while the other would be a new electronic securities wallet that supports ownership records for the tokenized instruments.

The pilot is expected to provide a practical test of whether wholesale CBDC can be used smoothly to move funds in tandem with tokenized bond transfers. If successful, it could pave the way for broader adoption of tokenized corporate bonds in India's financial markets.