India's First Tokenized Bond Sale to Settle in Digital Rupee

crypto.news reported on May 27 that SEBI Chairman Tuhin Kanta Pandey had approved a limited test of distributed ledger technology for corporate bond trading and settlement. Pandey said the RBI was working on the guidelines needed for the project, while SEBI and exchanges were prepared to proceed once the central bank finished its part. He estimated implementation could take six to nine months.

The May announcement did not identify an issuer or specify how the cash leg would work. Reuters' latest report names REC as the first issuer and says the wholesale digital rupee will be used to purchase the securities.

SEBI has already identified India's corporate bond market as an area for distributed ledger testing. Pandey said DLT was already in use for covenant monitoring and depository functions. Industry estimates cited in the earlier tokenization report put the market at nearly 59 lakh crore rupees (roughly $700 billion). Secondary-market activity has remained limited because many institutional buyers hold debt until maturity and retail participation is low. Tokenized equities hit $1.48 billion after Bybit added Meta and Tesla xStocks.

RBI Keeps Tokenized Bonds Distinct From Crypto

India's use of blockchain for regulated securities is developing alongside a stricter policy toward cryptocurrencies and privately issued stablecoins. A July 3 report on RBI policy said the central bank had recommended keeping banks and payment systems insulated from cryptocurrencies while India reviewed its digital asset policy. The RBI also reportedly told lawmakers that tokenized government securities and corporate bonds should be distinguished from cryptocurrencies, so restrictions aimed at speculative digital assets do not interfere with regulated tokenization projects.

Central bank money in digital form has been under test since November 2022, when the RBI launched its wholesale CBDC pilot using the e₹-W system to settle government securities transactions. A retail digital rupee pilot followed in December 2022. By October 2025, the central bank had added a CBDC-linked deposit pilot within the wholesale system with a limited group of banks, and RBI officials said tokenization of commercial paper and other money-market instruments was being examined.

The REC transaction takes those experiments into corporate debt issuance, and the wholesale CBDC is the settlement asset.

Other Indian authorities are also examining tokenization outside the bond market. On July 21, Maharashtra Chief Minister Devendra Fadnavis directed officials to prepare draft legislation for the proposed Maharashtra Digitisation and Exchange of Land Token Asset Act, a legal framework for recording and exchanging tokenized interests tied to immovable property through blockchain. An expert committee involving SEBI and the Bombay and National stock exchanges was tasked with developing the framework, according to the state announcement.

The REC pilot runs on infrastructure overseen by India's financial regulators and market institutions. A three-month lock-in applies to the bonds, Reuters reported. A secondary market would then let eligible participants holding both wallets trade the securities, one of the people familiar with the plans said. The distributed ledger keeps the ownership record through each transfer. Exchanges are expected to have secondary-market infrastructure for the tokenized bonds in place by December, one of the sources told Reuters.