India Tokenizes Corporate Bonds in Historic Pilot Program

India has launched a tokenized corporate bond pilot, allowing companies to issue and hold digital tokens on a distributed ledger. The Securities and Exchange Board of India (SEBI) announced that three companies have issued a combined 10.25 billion rupees ($107 million) through the new market infrastructure.

The pilot uses Demat 2.0, which allows corporate bonds to be issued and held as digital tokens on a distributed ledger owned by the country's statutory depositories. The system connects to the Reserve Bank of India's (RBI) wholesale central bank digital currency (CBDC) through its Unified Market Interface.

The first issuance came from public-sector lender REC, which raised 5 billion rupees from 18 investors on Monday. Engineering conglomerate Larsen & Toubro (L&T) raised another 5 billion rupees from four investors on Wednesday, while non-bank lender IIFL issued 250 million rupees in bonds to one investor on the same day.

SEBI said the infrastructure allows issuers to receive funds on the day of bidding instead of two to three days later. The regulator also noted that atomic settlement removes the delay between the movement of money and bonds, while smart contracts can automate interest and redemption payments.