India Plans Its First Tokenised Corporate Bond: How REC, CBDC and Demat 2.0 Could Work

Written by Finnovate

Content Team

India may soon test a new way to issue and settle corporate bonds.

A pilot reported for September 2026 is expected to involve state-owned financier REC issuing India’s first tokenised corporate bond, with an issue size of less than ₹500 crore.

The bond would reportedly use distributed-ledger technology for the securities side and India’s wholesale Digital Rupee, or e₹-W, for payment. Investors in the pilot are also expected to use a new securities wallet being referred to as Demat 2.0.

The bigger story is not the ₹500 crore size. It is whether India can connect a regulated corporate bond, a digital securities ledger and central-bank digital money in one settlement system.

What is a tokenised corporate bond?

A corporate bond is debt issued by a company or institution. Investors lend money to the issuer, which promises to pay interest and repay principal according to the terms of the bond.

A tokenised corporate bond is still a bond.

The difference is in the infrastructure used to represent ownership and transfer the security. Instead of relying only on conventional securities records, ownership can be represented digitally on distributed-ledger technology, or DLT.

It is not cryptocurrency

A tokenised REC bond would not be Bitcoin, Ether or another crypto asset. The digital token would represent a regulated financial security issued by a real-world entity.

Its value and risk would still depend on the issuer, coupon, maturity, prevailing interest rates, credit quality, liquidity and final issue terms.

What is India reportedly planning?

These are reported pilot details, not final offer terms.

What is officially confirmed is the broader regulatory direction. In May 2026, SEBI said it was examining the potential for tokenisation of bonds to improve accessibility, transparency and efficiency in the corporate bond market.

SEBI also highlighted a larger structural issue: India’s corporate bond market had around ₹59 trillion of outstanding issuance at the end of March 2026, but retail participation remained limited and about 98% of corporate bonds were privately placed.

How could a tokenised bond transaction work?

India already has electronic infrastructure for issuing, holding, trading and settling bonds. Tokenisation is not about making today’s system suddenly digital. It already is.

The experiment is about connecting ownership and payment more directly on programmable infrastructure.

This concept is known as Delivery versus Payment, or DvP.

If both legs are programmed so that one cannot complete without the other, settlement can move closer to atomic settlement: either both sides complete, or neither does.

What is Demat 2.0?

According to current reporting, Indian depositories are developing a new electronic securities wallet being referred to as Demat 2.0 for the pilot.

It would reportedly hold the tokenised security, while the wholesale CBDC wallet would handle payment.

Why is the Digital Rupee involved?

RBI launched the wholesale Digital Rupee pilot in November 2022, initially for settling secondary-market transactions in government securities.

The logic was straightforward: settlement in central-bank money can reduce the need for some settlement guarantees and collateral used to manage settlement risk.

This is more significant than simply recording a bond on blockchain because every securities transaction requires both the asset and payment to move safely.

What could tokenisation improve?

Future systems could potentially automate parts of coupon payments, redemptions or compliance checks.

But faster technology does not mean every surrounding process disappears. KYC, investor eligibility, regulatory reporting, cybersecurity, price discovery and liquidity still matter.

What tokenisation does not fix

This is the most important investor distinction.

If the issuer cannot repay, blockchain does not solve the repayment problem.

Credit risk

The issuer can still fail to pay interest or principal.

Interest-rate risk

Bond prices can still fall when market interest rates rise.

Liquidity risk

A tokenised bond may still be difficult to sell at a fair price if there are too few buyers and sellers.

Operational and technology risk

Digital wallets, interoperability, cybersecurity, legal finality and system resilience become important additional considerations.

Does REC being state-owned make the bond government-guaranteed?

No such assumption should be made.

REC is a Maharatna Central Public Sector Enterprise, but whether a specific security is secured, unsecured, guaranteed or otherwise supported depends on its final issue documents. Those terms have not yet been publicly released for the proposed pilot.

Can retail investors buy India’s first tokenised bond?

Based on information currently available, the initial pilot is not being positioned as a general retail offering.

It is reportedly intended for selected participants, and final eligibility conditions have not yet been published.

Wholesale CBDC itself is designed for institutional and large-value financial-market use rather than functioning like the retail e₹ wallet available to individuals.

So investors should not read the pilot as confirmation that blockchain-based corporate bonds will immediately become available to everyone.

Why does a sub-₹500 crore pilot matter?

Because the amount being raised is not the main experiment.

SEBI says India’s corporate bond market had about ₹59 trillion of outstanding issuance at the end of March 2026, with roughly ₹9.11 lakh crore mobilised through corporate debt markets in FY 2025-26.

Against that scale, a sub-₹500 crore issue is tiny.

If it works, regulators and market institutions can then assess larger questions:

• Can settlement be faster without increasing operational risk?
• Can bond servicing become more automated?
• Can depositories, banks and exchanges work across the same architecture?
• Can a functioning secondary market develop?
• Can the model scale while preserving investor protection and legal certainty?

That is why the secondary-market phase may ultimately matter more than the first issuance.

Tokenising one bond proves that a security can be created on the infrastructure. A functioning market would also need to prove that investors can buy, sell, settle, receive payments and handle the full bond lifecycle reliably.

FAQs

1. What is a tokenised corporate bond?

It is a corporate debt security whose ownership and transfers are represented digitally using distributed-ledger technology. It remains a bond and continues to carry credit, interest-rate and liquidity risks.

2. Is a tokenised corporate bond cryptocurrency?

No. The token represents a regulated financial security issued by a real-world entity. Blockchain or DLT is being used as part of the infrastructure.

3. Who is expected to issue India’s first tokenised corporate bond?

REC is reportedly expected to issue the pilot bond in September 2026 for less than ₹500 crore. These details have not yet been formally confirmed in final issue documents.

4. What is Demat 2.0?

Demat 2.0 is the name currently being used in reports for a new securities wallet being developed for the pilot. Its final architecture and wider-use rules have not yet been publicly released.

5. How will CBDC be used?

The pilot is expected to use RBI’s wholesale Digital Rupee, e₹-W, for the payment side while the tokenised bond is held on the securities side.

6. Can retail investors participate?

The initial pilot is reportedly for selected participants. Retail participation has not been announced.

7. Does tokenisation make a corporate bond safer?

No. It may improve settlement and record-keeping, but it does not remove credit risk, interest-rate risk, liquidity risk or the need to evaluate the final issue terms.

Disclaimer: This article is for educational and informational purposes only. It is based on information available as of August 26, 2026. Certain details of the proposed tokenised corporate-bond pilot are based on media reports and have not yet been formally announced in final regulatory or offer documents. Final terms may change. Nothing in this article is an offer, solicitation or investment recommendation. Investors should evaluate the final offer documents, credit risk, liquidity, suitability and their own financial circumstances before investing in any security.