REC Ltd, India’s government-owned power sector financier, is opening the bidding window for what amounts to the country’s first tokenized corporate bond issuance. The offering could reach up to 5 billion rupees, roughly $53 million, in a pilot that stitches together distributed ledger technology, a new electronic wallet system, and the Reserve Bank of India’s wholesale central bank digital currency.
How the deal is structured
The bond issuance starts with a base size of 1 billion rupees. On top of that sits a greenshoe option, a mechanism that lets the issuer expand the offering if demand warrants it, potentially adding another 4 billion rupees to bring the total to the 5 billion rupee ceiling.
The bonds are due in May 2028, giving them a relatively short maturity window. Bidding is expected to kick off in early September 2026, with the formal launch timed to coincide with the Global Fintech Fest in mid-September.
This is not a retail play. Only institutional investors who hold active securities accounts and RBI wholesale CBDC wallets can participate in the bidding process.
After issuance, holders face a mandatory three-month lock-in period before any secondary market trading becomes available. The infrastructure for that secondary market is expected to be in place by December 2026.
The technology stack
Ownership of these bonds will be tracked through SEBI’s DEMAT 2.0 electronic wallet, a new system that records transactions on a distributed ledger rather than through the traditional centralized depository model.
Settlement will flow through the RBI’s wholesale CBDC wallets, enabling what’s described as near-instant atomic settlement. In plain terms: the bond and the cash change hands simultaneously on the ledger, with no gap between delivery and payment. Traditional bond settlement in India follows a T+1 cycle, meaning one business day passes between trade execution and final settlement. Atomic settlement compresses that to seconds.
One important caveat: this pilot explicitly excludes public blockchain assets. Everything runs within a regulated, permissioned environment overseen by India’s financial regulators.
Why India is doing this now
The pilot represents a joint effort between the RBI and SEBI, India’s central bank and securities regulator respectively. India’s wholesale CBDC program has been in testing since late 2022, initially focused on interbank government securities transactions. SEBI announced the tokenized bond pilot in May 2026, which outlined an ambitious timeline of six to nine months for its execution.
REC Ltd is a logical first issuer for this experiment. As a state-owned entity with strong credit ratings and deep institutional relationships, it removes credit risk from the equation.
What this means for markets
For institutional investors in India’s debt markets, faster settlement means less capital tied up in margin requirements, lower counterparty risk means cheaper hedging costs, and a DLT-based ownership record could simplify corporate actions like coupon payments and redemptions.
The 5 billion rupee ceiling keeps the stakes manageable. If something goes wrong, whether a technology glitch, a reconciliation issue, or an unexpected regulatory complication, the financial exposure is contained. That’s by design.
The deliberate exclusion of public blockchains signals that India’s regulators see tokenization and crypto as separate phenomena. They want the efficiency gains of distributed ledger technology without the volatility, anonymity, or regulatory ambiguity associated with public chains.