Exclusive-India plans first tokenised bond issue in September, sources say

India is set to launch tokenised corporate bonds in September, according to sources familiar with the matter. The groundbreaking issuance, to be spearheaded by state-owned power financier REC, will mark India's foray into using blockchain technology for bond transactions. This move would see India join the ranks of markets like Europe and Hong Kong in utilizing such technology for bond issuance and settlement.

Tokenised bonds, which record ownership, issuance, trading and settlement digitally on a blockchain, promise near-instant settlement times. India's market regulator and central bank are reportedly collaborating to push this innovative technology forward, though the specifics of the framework remain confidential.

The first tokenised bond issue will amount to less than 5 billion rupees ($57 million) and is expected to be unveiled at a financial technology event in Mumbai. The bonds will be bought using India's central bank digital currency. Initially, only a select group of investors will be permitted to participate in the pilot stage.

To partake in the bond, investors will need to access two digital accounts: a wholesale digital currency wallet from a bank and a new electronic securities wallet, DEMAT 2.0. Depositories NSDL and CDSL have not yet commented on the development.