India Launches Blockchain Bonds Next Month

India is poised to embrace a new era of financial transactions with the upcoming rollout of tokenised corporate bonds next month. This groundbreaking initiative will utilize blockchain technology to facilitate immediate settlement of bond transactions, placing India on par with advanced markets in Europe and Hong Kong.

The state-owned power financier, REC, will spearhead this innovative offering, issuing bonds valued at less than 5 billion rupees ($57 million). This pilot phase is designed exclusively for a select group of investors. To participate, investors must possess two essential digital accounts: a wholesale digital currency wallet and a new electronic securities wallet, DEMAT 2.0, which will record holdings on a distributed ledger.

The central bank's digital currency will be instrumental in acquiring these tokenised bonds. Following the initial offering, which is expected to be unveiled at a financial technology event in Mumbai, subsequent trades will be restricted to participants holding compatible CBDC and securities wallets. Exchanges are anticipated to establish a secondary market for these tokenised bonds by December, with an initial three-month lock-in period.