- REC’s September tokenized bond pilot is expected to remain below ₹500 crore.
- DEMAT 2.0 records bond ownership, while the RBI’s e₹-W settles payment in digital rupees.
- Selected investors need both DEMAT 2.0 and e₹-W wallets during the September pilot.
India is preparing its first tokenized corporate bond issue for September 2026, with state-owned REC expected to raise less than ₹500 crore. The pilot combines DEMAT 2.0, a new securities wallet, with RBI’s wholesale central bank digital currency, e₹-W.
That design keeps the transaction inside regulated infrastructure while excluding Bitcoin, Ethereum, USDT, and other public crypto assets. The REC blockchain bonds pilot, therefore, tests blockchain-based securities records without turning the bond or its settlement money into public cryptocurrency.
DEMAT 2.0 Moves Bond Ownership Onto Distributed Ledgers
DEMAT 2.0 is the electronic securities wallet being developed by Indian depositories for the September pilot, according to Reuters sources. The wallet would record investors’ tokenized bond holdings on distributed-ledger infrastructure.
However, tokenization does not change REC’s repayment obligations, interest terms, maturity, or credit risk. Instead, it changes how ownership is recorded and potentially transferred between eligible investors.
For investors, access will initially remain limited because no public retail subscription process exists. Selected participants must maintain both an e₹-W wallet and the new securities wallet.
As a result, a wholesale CBDC e₹-W bond purchase would involve two connected movements. Investors would deliver digital rupees through the central bank system, while DEMAT 2.0 records delivery of the bond.
However, RBI and SEBI have not published final operational procedures for the September transaction. Moreover, ordinary retail investors are not expected to participate initially, as e₹-W is restricted to financial institutions and intermediaries.
RBI’s e₹-W Connects the Cash and Securities Settlement Legs
Basically, the RBI Wholesale CBDC bond settlement component supplies the cash side of the transaction in central-bank money. RBI launched e₹-W in November 2022 for secondary-market government securities settlement.
It later expanded the pilot to interbank lending and borrowing in the call-money market. RBI says central-bank-money settlement can reduce transaction costs by limiting guarantees or collateral used to manage settlement risk.
The system also supports programmability and smart contract functionality, which can connect payment instructions with digital security transfers. Accordingly, participants need separate wallets, as DEMAT 2.0 records the security, while e₹-W represents the payment used to acquire it.
Connecting both systems could reduce reconciliation between separate cash and securities infrastructures. It could also shorten the interval between recording the bond transfer and completing payment. However, the model remains distinct from settlement using USDT or another privately issued stablecoin.
Under the Wholesale CBDC digital rupee bond settlement model, the payment asset is a direct RBI liability. By contrast, private stablecoins depend on reserves and obligations maintained by commercial issuers.
Why India’s Tokenized Bond Pilot Excludes Public Crypto
That distinction is central to the pilot, as blockchain-based tokenization does not require public cryptocurrency. Bitcoin, Ethereum, USDT, and other public digital assets have no reported role in either the security or settlement side.
Instead, the tokenized bond remains regulated corporate debt carrying REC’s repayment obligations, interest terms, maturity, and credit risk. Meanwhile, the payment asset remains central-bank money issued by RBI rather than a privately backed digital token.
As a result, the transaction stays within regulated financial infrastructure involving depositories, selected investors, RBI, and SEBI-linked systems. It also allows regulators to test programmable financial infrastructure without introducing public crypto assets into bond settlement.
For investors, the economics of the security remain largely unchanged. They still face REC’s credit risk, interest-rate risk, maturity terms, and potential liquidity risk.
What changes is the underlying market infrastructure. Traditional corporate bonds use existing exchanges, RFQ systems, clearing corporations, banks, and depositories. The pilot instead introduces distributed-ledger ownership records and e₹-W settlement into that market infrastructure.
Tokenization Tests More Than Faster Bond Settlement
Even so, faster settlement is only part of the experiment considering India’s existing corporate bond market already supports rapid settlement. The NSE Request for Quote platform allows T+0 settlement for bonds and T+1 settlement for all supported instruments.
It also supports delivery versus payment, so tokenization is not simply replacing a slow multi-day process. The larger test is whether distributed ledgers can synchronize ownership records and central-bank-money settlement more closely.
Reports described the proposed system as enabling instant settlement. However, regulators have not confirmed whether every transaction will use fully atomic delivery-versus-payment.
The bonds are also expected to carry a three-month lock-in period after issuance. Reuters reported that exchanges are expected to develop a secondary market by December 2026 using the new tokenized infrastructure.
However, December remains a reported target rather than a confirmed launch date. Detailed rules covering trading procedures, market-making, and interoperability have not yet been published.
Sub-₹500 Crore Pilot Tests a New Market Infrastructure
The scale of the India tokenized bond September pilot also shows that the experiment remains small compared with the broader corporate debt market. SEBI data show ₹78,063.29 crore of corporate bonds were privately placed during July 2026 across 164 issues.
By comparison, REC’s issue is expected below ₹500 crore. That makes the transaction primarily an infrastructure test rather than an immediate migration of India’s corporate bond market.
However, the experiment could matter beyond one REC issue. SEBI said in May that it was examining bond tokenization, including possible use with online bond platforms.
RBI has also identified asset tokenization as a use case for expanding its CBDC pilots. Earlier RBI research discussed wholesale CBDC applications across capital markets, commercial paper, and certificates of deposit.
Taken together, these developments place the REC blockchain bond pilot within a broader test of regulated digital-market infrastructure. The model links tokenized securities with central-bank money on programmable systems.
Its significance lies in that controlled structure. India is not building a crypto bond market. Instead, it is testing whether DEMAT 2.0 and e₹-W can modernize market infrastructure without relying on public crypto.
Related: Radhika Gupta Says ‘Don’t Buy Crypto in India’: Is Regulation the Bigger Risk?
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