India plans first tokenised bond issue in September, sources say

Business Recorder reported, citing three people with direct knowledge, that India expects to launch tokenised corporate bonds next month. The notes would be the first of their kind issued by REC, a state-owned power lender, and would bring India level with Europe and Hong Kong in applying blockchain to issuance and settlement. The move is a test of whether the technology can make bond settlement near-instant.

Tokenised bonds keep track of who owns them and every issue, trade and settlement digitally on a ledger, so deals can close almost at once. The sources added that the markets regulator and the central bank are cooperating to advance the technology, and that talks remain private. REC is reportedly planning an offering worth under 5 billion Indian rupees ($57 million), which is expected to be unveiled at a financial technology event in Mumbai next month. Payment for the notes would be made in the central bank's digital currency.

Investors would need two digital accounts: a bank-provided wholesale wallet for digital currency, plus a new electronic securities wallet. Indian depositories are building DEMAT 2.0, an unprecedented electronic wallet that will log bond holdings on a distributed ledger. Later trades could only occur between participants with both compatible wallets, and the bonds will carry an initial three-month lock-in.