India's First Tokenised Bond: What Changes When Debt Moves to Blockchain

REC Ltd, the state-owned lender to India's power and infrastructure sector formerly known as Rural Electrification Corporation, raised ₹500 crore on Monday through the country's first pilot issue of tokenised corporate bonds. The transaction is an early test of whether blockchain-based securities infrastructure can work inside India's regulated debt market. 

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The issue was carried out under the Securities and Exchange Board of India's Regulatory Sandbox Framework. It drew bids of ₹796 crore, carries a coupon of 7.30% and has a tenor of one year and nine months. Pay-in, allotment and listing were all completed on the same day. 

Corporate bonds in India are already issued, held and settled electronically. So the obvious question is what tokenisation adds, and what it might change for investors and the market as a whole. 

What a tokenised bond is 

The Bank for International Settlements defines a tokenised bond as an ordinary debt security whose ownership or economic rights are represented digitally as tokens on a programmable ledger. That ledger may use distributed ledger technology, where records are kept and updated on a shared digital register. In a regulated market this need not be a public blockchain; it can be a permissioned network open only to authorised participants. 

Tokenisation does not convert a bond into a cryptocurrency. The security still has an issuer, a coupon, a maturity date and legal obligations. What changes is how the instrument is represented and how transactions in it can be executed. 

Consider a company that issues a ₹100 crore bond, of which an investor holds ₹10 lakh. That holding can have a matching digital representation on the ledger. The denomination is unchanged; what is new is the ability to tie ownership and transfers to rules embedded in the infrastructure itself. 

Sidharth Sogani Jain, founder, CEO and fund manager at Blue Aster Capital and CREBACO Global, takes the view that India's corporate bond market is not a broken system in need of repair. Tokenisation, as he sees it, could layer programmability onto existing infrastructure and potentially speed up settlement. 

How this differs from a demat bond 

Dematerialisation replaced paper certificates with electronic records held through the depository system. Tokenisation goes one step beyond that by placing the asset, or a representation of it, on a ledger that can execute instructions. 

Such a ledger can do more than record who owns what. It can also carry the rules governing transfers and other transactions. The BIS identifies this integration of messaging, reconciliation and asset transfer into a single process as the source of tokenisation's potential. 

In today's markets, those functions sit in separate systems. A trade is agreed, payment instructions are sent, securities change hands and the records held by different intermediaries are then reconciled. A tokenised system could fold some of those steps into one. 

What happens when a tokenised bond changes hands 

The relevant principle is delivery-versus-payment: the buyer receives the security only once the seller receives the money. 

In a conventional trade, the securities leg and the payment leg can travel through separate systems and must be reconciled afterwards. In a tokenised structure they can be connected through common or interoperable digital infrastructure. 

This is where the Reserve Bank of India's wholesale central bank digital currency enters the REC pilot. The payment leg is settled in digital rupees, while the bond itself is represented on the tokenised securities infrastructure. The objective is atomic settlement, in which the transfer of the bond and the transfer of payment are bound together so that neither happens without the other. REC reports that its pilot delivered atomic DvP along with improved transparency through a shared ledger. 

The BIS counts this among the main potential advantages of tokenisation. When money and securities both sit on compatible programmable infrastructure, delivery and payment can be executed at the same moment, cutting the need for separate reconciliation and potentially reducing settlement risk. 

What could change 

Faster settlement. REC's tokenised structure allowed pay-in, allotment and listing to be completed within a single day. 

Less reconciliation. A shared ledger could reduce the need for each market participant to keep and reconcile its own set of records. 

More programmability. Rules for transfers and corporate actions can be built into the infrastructure. Over time this could automate interest payments, redemptions or collateral movements, though how far that goes depends on how each system is designed. Jain regards programmability and the prospect of shorter settlement cycles as the chief potential gains. 

Greater transparency. A shared, time-stamped ledger gives authorised participants a common view of transactions and ownership. This does not require a public blockchain. REC's pilot runs on a permissioned DLT, with access limited to authorised participants. 

What tokenisation does not fix 

The BIS is careful about the limits. Tokenisation can change how the bond market operates behind the scenes, but on its own it does not create enough buyers and sellers, settle questions of legal clarity or guarantee that new systems mesh with existing ones. 

A bond that is easier to transfer digitally is not automatically easier to trade. Nor does tokenisation open bonds to retail investors by default; the REC pilot was run inside a regulated, permissioned system and was not a retail offering. Legal questions remain over whether the digital token or the existing legal record establishes ownership, and over how tokenised bonds would interact with exchanges, depositories and other market infrastructure. The World Bank has identified interoperability, smart-contract vulnerabilities and regulatory uncertainty as risks for digital tokenised bonds. 

The global market remains small. In 2025 the BIS reported that more than 20 tokenised bonds had been issued by sovereigns, supranationals and agencies, worth over $4 billion across nine currencies. Early evidence pointed to liquidity and issuance costs broadly in line with conventional bonds, but the BIS also noted that the market was still at an early stage, with little evidence yet of how the technology performs at scale. 

Why India is testing this now 

SEBI treats tokenisation as part of the corporate bond market's next stage of development. In May, SEBI whole-time member Amarjeet Singh indicated that the regulator was studying bond tokenisation, with particular reference to online bond platforms, as a way to improve accessibility, transparency and efficiency. 

If the REC pilot succeeds, the next question is whether tokenisation can move beyond a controlled institutional experiment and prove useful across a wider section of India's debt market.