India has completed its first tokenized corporate bond issuance, marking a major test of whether blockchain infrastructure and central bank digital currency can make one of the country’s largest financial markets faster and more efficient. State-owned power financier REC raised ₹500 crore, approximately $53 million, through the pilot under the Securities and Exchange Board of India’s Regulatory Sandbox Framework. The bond carries a 7.30% annual coupon and has a tenor of one year and nine months, maturing in May 2028.REC initially targeted ₹100 crore with a ₹400 crore greenshoe option. Investor demand reached ₹796 crore, allowing the company to issue the full ₹500 crore. Around 20 institutional investors participated, with HDFC Bank and ICICI Bank among the buyers reported by Bloomberg.
Bonds and Digital Rupees Settle Together
The most significant innovation occurred during settlement. Investors bid for the securities through the National Stock Exchange’s electronic bond platform, but the resulting holdings were recorded through a new DLT-based system known as Demat 2.0 rather than relying exclusively on conventional securities infrastructure. Payment was settled using the Reserve Bank of India’s wholesale central bank digital currency, or CBDC. That allowed the security and money to move using atomic delivery-versus-payment.Under atomic settlement, transfer of the bond is directly linked to transfer of payment. Either both occur or neither occurs, reducing settlement risk and the reconciliation required when securities and cash move through separate systems. REC said pay-in, allotment and listing were completed on the same day. Tokenization does not turn REC’s bond into a cryptocurrency. It remains a regulated corporate debt security carrying the same obligations to investors. The difference is that ownership and settlement can be represented on programmable distributed-ledger infrastructure. The pilot also uses a permissioned system restricted to authorized participants rather than a public blockchain such as Ethereum or Solana.
L&T Becomes First Private-Sector Issuer
India’s experiment expanded almost immediately. On September 9, Larsen & Toubro announced that it had raised another ₹500 crore through tokenized bonds, becoming India’s first private-sector corporate issuer under the new framework. L&T’s bonds have a three-year maturity and carry a 7.4% coupon. IIFL Finance also entered the market with a smaller ₹25 crore tokenized issue carrying a 9.1% coupon and two-year maturity. The rapid succession of issuances suggests regulators are moving beyond a single proof of concept.SEBI has been exploring tokenization as a potential way to increase transparency and efficiency in India’s corporate debt market, while the RBI’s wholesale digital rupee provides a tokenized form of central-bank money for the payment side. The technology could eventually reduce settlement times, reconciliation requirements and operational costs while allowing financial assets and payments to exist on interoperable programmable infrastructure. Significant limitations remain. REC’s issuance was an institutional pilot rather than a retail product, and tokenization does not automatically create greater secondary-market liquidity. Questions around interoperability, custody, taxation and how tokenized records interact with India’s existing depository infrastructure will also need to be resolved before the model can operate at scale.But the first transaction establishes an important precedent. India has now demonstrated that a conventional corporate bond can be issued through regulated tokenized infrastructure and settled against central-bank digital money. And with L&T and IIFL following REC within days, tokenized bonds are already moving from a one-off government-backed experiment toward a broader test of how India’s corporate debt market could eventually operate.