What blockchain adds to corporate debt market

India’s first tokenised bond: What changes when debt moves to blockchain

Tokenisation changes how ownership and settlement are recorded, potentially allowing the bond and digital money to move together in a single transaction

India’s first tokenised corporate bond tests whether a bond already held electronically can gain from a programmable ledger and same-day digital settlement.

Barkha MathurNew Delhi7 min read Last Updated : Sep 08 2026 | 9:46 AM IST

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REC Ltd (formerly Rural Electrification Corporation), a state-owned lender that finances India’s power and infrastructure sector, on Monday raised ₹500 crore through the country’s first pilot issue of tokenised corporate bonds, marking a significant step in regulatory efforts to test blockchain-based securities infrastructure.
 
The issue, conducted under the Securities and Exchange Board of India’s (Sebi’s) Regulatory Sandbox Framework, attracted bids worth ₹796 crore and carried a 7.30 per cent coupon for a tenor of one year and nine months. Pay-in, allotment and listing were completed on the same day.
 
But with corporate bonds already issued, held and settled electronically, what exactly does tokenisation add to the system, and what could it change for investors and the wider debt market?
 

What is a tokenised bond?

The Bank for International Settlements (BIS) describes a tokenised bond as a conventional debt security in which ownership or economic rights are represented digitally through tokens on a programmable ledger. The underlying infrastructure can use distributed ledger technology (DLT), where transaction records are maintained and updated on a shared digital ledger. In a regulated financial market, this does not necessarily mean using a public blockchain. The ledger can instead run on a permissioned network, where only authorised participants can transact.
 
Tokenisation does not turn a bond into a <a href="https://xpertsstudio.com/hackers-return-85-of-stolen-bitcoin-from-last-weeks-bridge-attack-cryptocurrency-market-news-bitcoin-btc-news/” title=”Hackers Return 85% of Stolen Bitcoin from Last Week’s Bridge Attack | Cryptocurrency Market News Bitcoin (BTC) News”>cryptocurrency. The instrument remains a corporate bond, with an issuer, coupon, maturity and legal obligations. What changes is the way the security is represented and how transactions involving it can be carried out.
 
For example, if a company issues a ₹100 crore bond and an investor holds ₹10 lakh worth of it, that holding can have a corresponding digital representation on the ledger. The key change is not the denomination of the bond, but the possibility of linking ownership and transfers to rules built into the digital infrastructure.
 
Sidharth Sogani Jain, founder, CEO and fund manager at Blue Aster Capital and CREBACO Global, told Business Standard: “India’s existing corporate bond market is not a broken system that tokenisation needs to fix. Instead, tokenisation could add programmability to the existing infrastructure and potentially make settlement faster.”

So, what is different from a demat bond?

Dematerialisation replaced paper certificates with electronic records maintained through the securities depository system. Tokenisation takes the digital representation a step further by putting the asset, or a representation of the asset, on a programmable ledger.
 
The ledger can potentially do more than record ownership. It can also carry instructions governing transfers and other transactions. According to BIS, the potential of tokenisation comes from integrating messaging, reconciliation and asset transfer into a single process.
 
In conventional markets, different systems perform different functions. A trade is agreed, payment instructions are sent, securities are transferred, and records across intermediaries are reconciled. A tokenised system can potentially bring some of those steps together. 
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What happens when a tokenised bond is bought?

The key concept here is delivery-versus-payment (DvP), which means the buyer receives the security only when the seller receives the payment.
 
In a conventional transaction, the securities and payment legs can move through separate systems and then have to be reconciled. With a tokenised structure, they can potentially be linked through a common or interoperable digital infrastructure.
 
This is where the Reserve Bank of India’s (RBI’s) wholesale central bank digital currency (CBDC) becomes relevant to the REC pilot. The payment leg uses digital rupees, while the security is represented through the tokenised securities infrastructure. The aim is to enable what is known as atomic settlement, where the transfer of the bond and the payment are linked. One happens only if the other happens. REC said its pilot introduced atomic DvP along with greater transparency through a shared ledger.
 
The BIS has identified this as one of the principal potential advantages of tokenisation. If money and securities exist on compatible programmable infrastructure, delivery and payment can be executed simultaneously, reducing the need for separate reconciliation and potentially lowering settlement risk.

What could this change?

1. Faster settlement: REC said the tokenised structure enabled pay-in, allotment and listing on the same day.
2. Less reconciliation:A shared ledger could reduce the need for different market participants to maintain and reconcile separate records.
3. More programmability:Rules governing transfers and corporate actions can potentially be built into the digital infrastructure. This could eventually automate processes such as interest payments, redemptions or collateral movements, although the extent of automation would depend on how each system is designed. Jain sees programmability and potentially shorter settlement timelines as among the main potential gains from tokenisation.
4. Greater transparency:A shared, time-stamped ledger can give authorised participants a common view of transactions and ownership records. But this does not mean tokenised bonds have to operate on a public blockchain. REC’s pilot uses a permissioned DLT, where access is restricted to authorised participants.

What tokenisation does not solve

According to the BIS, tokenisation can change the way the bond market works behind the scenes. But it does not by itself solve problems such as finding enough buyers and sellers, ensuring legal clarity or making new systems work smoothly with existing ones.
 
A bond may become easier to transfer digitally without becoming easier to trade. Tokenisation also does not automatically make bonds available to retail investors. REC’s pilot was conducted within a regulated, permissioned system and was not a retail offering. There are also legal questions around whether the digital token or the existing legal record would establish ownership, and how tokenised bonds would interact with exchanges, depositories and other market infrastructure. The World Bank has flagged interoperability, smart-contract vulnerabilities and regulatory uncertainty as risks for digital tokenised bonds.
 
The global market is still small. The BIS said in 2025 that more than 20 tokenised bonds issued by sovereigns, supranationals and agencies had been issued, worth more than $4 billion across nine currencies. Early evidence suggested that tokenised bonds could have liquidity and issuance costs broadly comparable with conventional bonds, but the BIS said the market remained at an early stage, with limited evidence of how the technology will perform at scale.

Why is India experimenting now?

Sebi sees tokenisation as part of the next phase of development of the corporate-bond market. In May, Sebi whole-time member Amarjeet Singh said the regulator was examining bond tokenisation, particularly in the context of online bond platforms, to improve accessibility, transparency and efficiency.
 
If the REC pilot works, the next stage will be to determine whether tokenisation can move beyond a controlled institutional experiment and become useful across a broader part of India’s debt market.

Can you buy tokenised bonds?

For now, the answer for most retail investors is no. REC’s tokenised bond was issued as a pilot within a regulated, permissioned system and was aimed at eligible market participants. It was not offered through the usual retail bond-buying routes. 
 
According to Blue Aster Capital’s Sidharth Sogani Jain, if and when tokenised bonds are eventually opened up to retail investors, the process will depend on the regulatory framework, the platforms supporting such transactions, such as Zerodha, Groww, and demat accounts, and how custody and settlement are structured.
Topics :SEBIBS Web ReportsRECcorporate bondscorporate bond market

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First Published: Sep 08 2026 | 9:31 AMIST

Source: www.business-standard.com