REC Completes India's First Tokenized Corporate Bond Pilot Under SEBI Regulatory Sandbox
REC completes India's first tokenized corporate bond pilot
India's state-owned power finance company REC has completed the first pilot of tokenized corporate bonds under the SEBI regulatory sandbox, with a base size of approximately ₹10 billion and a green shoe of about ₹40 billion, totaling around ₹50 billion, with a coupon rate of 7.30% and a maturity of 1 year and 9 months, maturing around May 2028.
Bidding was conducted on the NSE electronic bidding platform, receiving bids of approximately ₹79.6 billion. This corresponds to about 8 times the base size of ₹10 billion and approximately 1.6 times the total of ₹50 billion. Payment, allocation, and listing were completed on the same day, with the bonds listed on both NSE and BSE. Coordinating parties included SEBI, the Reserve Bank of India, NPCI, custodians, and exchanges.
Settlement used RBI wholesale central bank digital currency, with holdings recorded in custodians' Demat 2.0 blockchain securities wallets, achieving atomic settlement of securities and funds. Only institutions that have opened both securities wallets and wholesale CBDC wallets can bid. Sources indicate that about 20 institutions participated, including HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, AK Capital, ICICI Securities PD, Taurus Group, and Trust Investment Advisors; HDFC was also one of the arrangers.
Larsen & Toubro subsequently issued similar bonds of approximately ₹50 billion with a three-year term and a coupon rate of 7.40%. IIFL Finance issued ₹2.5 billion with a two-year term and a coupon rate of 9.10%, becoming the first non-government NBFC to do so. The tokenized bonds have been listed, but the secondary trading mechanism has not yet opened, with reports indicating a lock-up period of about three months, and exchange arrangements may wait until around December.
REC Executive Director Mohan Lal Kumawat stated that this move aims to shorten settlement and friction. RBI official Vasudevan also reminded that tokenization still carries legal, privacy, and interoperability risks. The bonds themselves remain corporate bonds, with the issuer responsible for interest and principal payments; the change is in the registration and settlement process, not the credit structure.
In market mechanics, buyers are banks, mutual funds, and corporate treasurers that have opened dual wallets, while sellers are high-rated issuers looking to compress T+ settlement. The event is driven by the regulatory sandbox release, not the public crypto market. Beneficiaries are those in the wholesale CBDC track, Demat 2.0, and arrangements that can complete issuance on the same day; those under pressure are funds in transit and custodial processes in traditional multi-day settlements. The 8 times subscription corresponds to the base amount and does not represent an existing tradable tokenized bond market.
REC's stock price closed at approximately ₹316.50 on BSE, down about 0.94%; the tokenized bonds currently have no independent secondary trading price.
Source: Public Information
ABAB AI Insight
REC is a Maharatna-level NBFC under the Ministry of Power, primarily engaged in lending to power generation and grid projects, and bonds are part of its regular liabilities. Indian corporate bonds have long been stuck with thin secondary liquidity and lengthy settlement chains. Since May, SEBI has included tokenization in the agenda for online bond platforms, allowing state-owned issuers to test first, using wholesale digital rupees for payment legs. This does not turn bonds into crypto assets, but rather migrates already digitized holdings to programmable ledgers, settling simultaneously with central bank currency.
The capital path is the "regulatory dual wallet": one side records securities in Demat 2.0, while the other side pays with wholesale CBDC, both are essential, hence retail cannot enter. HDFC and ICICI's participation is based on familiarity with REC's credit while testing future market-making and custody interfaces. L&T and IIFL followed up the next day, indicating that arrangements have copied document templates to private entities. The lock-up period indicates that the exchange is not yet ready for continuous bidding; the pilot sells issuance efficiency, not intra-day liquidity.
Comparable examples include Hong Kong Monetary Authority's tokenized government green bonds, on-chain settlement in European experiments, and Singapore's Project Guardian for wholesale tokenized bonds. India is transitioning from sandbox issuance to infrastructure competition, not yet entering retail fragmentation and market-making. RBI's mention of legal and interoperability risks serves as a reminder: when two ledgers coexist, default execution, pledging, and taxation still follow old laws.
Structural judgment belongs to the technical substitution driving the shift of settlement rights. The mechanism is: traditional bond markets separate ownership, payment, and listing into multiple days and institutions; atomic settlement compresses these three steps into one. Whoever controls the wholesale CBDC and Demat 2.0 controls intra-day liquidity of corporate bonds. Pricing power shifts from custodial clearing delays to the central bank digital currency track; institutions not connected to dual wallets temporarily cannot purchase new bonds, while old custodians become backups rather than the main path.
ABAB News · Cognitive Law
Tokenization first changes settlement, not credit
Atomic settlement eliminates in-transit funds, not risks
Dual wallet threshold determines who can enter the new bond market