India plans to launch tokenised corporate bonds in September 2026, testing the use of blockchain technology to support instant settlement of bond transactions, according to three sources with direct knowledge of the matter.
First issuance and market context
The notes will be issued for the first time by state-owned power financier REC, a move that would place India alongside markets such as Europe and Hong Kong in using blockchain technology for bond issuance and settlement. Tokenised bonds are securities whose ownership, issuance, trading, and settlement are recorded digitally on a blockchain or distributed ledger, allowing transactions to be completed on a near-instant basis.
According to the sources, who spoke on condition of anonymity given the confidential nature of ongoing discussions, India's markets regulator and central bank are working together to advance the use of the technology. REC is expected to issue tokenised bonds worth less than INR 5 billion, equivalent to approximately USD 57 million, as part of the offering. One source said the offering is expected to be unveiled at an annual financial technology event in Mumbai in September 2026.
Use of central bank digital currency
According to one of the sources, India's central bank digital currency (CBDC) will be used to purchase the tokenised bonds. Details relating to the issuer, timeline, and regulatory framework have not previously been reported. One source said the offering would initially be made available only to a select group of investors during the pilot stage; the identities of these investors could not be confirmed.
The Reserve Bank of India, the markets regulator, and REC did not respond to requests for comment.
New bond framework
To access the bonds, investors will need two separate digital accounts: a wholesale digital currency wallet provided by a bank, and a new electronic securities wallet. According to the sources, Indian depositories are developing a new type of electronic wallet, referred to as DEMAT 2.0, which will record bond holdings on a distributed ledger technology chain.
One source said subsequent trades will only be able to take place between participants holding both a compatible CBDC wallet and a compatible securities wallet. The bonds will carry an initial three-month lock-in period, and exchanges are expected to develop a secondary market for the tokenised bonds by December 2026, according to one source. The securities will not be traded on the conventional electronic book provider platform used for standard bond issuances.
India's two central depositories, NSDL and CDSL, did not immediately respond to requests for comment.
Implications for India's capital markets
If confirmed, the planned issuance would mark an initial step for India in applying blockchain-based settlement to domestic corporate bond markets in 2026, following similar developments already introduced in Europe and Hong Kong. The pilot's reliance on CBDC-based settlement and a newly developed securities wallet infrastructure suggests a coordinated effort between India's regulatory authorities and market infrastructure providers to test tokenised bond issuance within a controlled group of participants before any broader rollout.
