India is set to test blockchain technology for bond issuance, putting it alongside global hubs like Europe and Hong Kong in modernizing debt markets. State-owned power financier REC Ltd will launch the pilot next month, targeting instant settlement of transactions.
What Are Tokenised Bonds?
Tokenised bonds are conventional debt securities managed digitally on a distributed ledger (blockchain). Supported jointly by the RBI and SEBI, this setup replaces traditional multi-day settlements with near-instant clearing.
Pilot Overview
- Issuer: State-owned REC Ltd.
- Size: Under 5 billion rupees (~$57 million).
- Payment: Purchased using India's Central Bank Digital Currency (CBDC).
- Access: Limited to a select group of institutional investors for the initial trial.
Required Accounts & Trading Setup
To participate, investors must link two accounts:
- Wholesale CBDC Wallet: Provided by commercial banks for digital rupee payments.
- DEMAT 2.0 Wallet: Built by NSDL and CDSL to record bond holdings on the blockchain network.
Transactions can only occur between counterparties holding both wallet types. The bonds carry an initial three-month lock-in period, with secondary exchange trading planned by December.
Source: Reuters
