India will use wholesale CBDC to pilot tokenize bonds in September

India plans to launch a tokenized bond pilot in September to connect the central bank's digital currency settlement.

According to reports, India is preparing to conduct the first batch of tokenized corporate bond tests issued in September this year. This pilot will combine blockchain settlement with the country's central bank digital currency (CBDC). The plan is expected to be piloted through a limited investor base before a wider marketing campaign.

According to Reuters, India's state-owned electricity infrastructure finance company REC Limited plans to issue tokenized bonds of no more than 5 billion Indian rupees (approximately 57 million US dollars). The report, released Monday and based on three people familiar with the matter, said the pilot project could be announced at an annual fintech event in Mumbai in September.

Core Points

It is reported that REC Limited plans to issue tokenized corporate bonds of no more than Rs 5 billion for the first time, pointing to September. The pilot is expected to use India's central bank digital currency to purchase these bonds, thereby directly linking tokenized securities to central bank clearing. Participants may need to open two separate digital accounts: a wholesale central bank digital currency wallet and a dedicated electronic securities wallet. Depository institutions are developing a "DEMAT 2.0" system to use distributed ledger technology to track bond holdings. An initial three-month lock-up period is expected and secondary market trading is planned to be launched by December.

Pilot of tokenized bonds built around central bank digital currency

Reuters reported that during the pilot period, India's central bank digital currency will be used to purchase tokenized bonds. This design is critical because it aims to achieve end-to-end integration-tokenized securities are not only recorded on the ledger, but also settled through a central bank-backed digital payment track.

According to the reported settings, investors need to have two digital accounts to participate. One is a wholesale central bank digital currency wallet provided by banks, and the other is a new electronic securities wallet used to hold and record tokenized bond positions.

This approach differs from earlier experiments with tokenized assets, which generally focused on issuance and bookkeeping, while transfers still relied on traditional payment and settlement mechanisms. If implemented as described, the Indian pilot will reduce settlement frictions by integrating securities clearing and payment settlement into a more unified process.

DEMAT 2.0 and the promotion of blockchain-based securities records

The electronic securities wallet at the core of the pilot was developed by India's securities depositories. Reuters calls the project "DEMAT 2.0" and is expected to use distributed ledger technology to record bond holdings.

Reuters also reported that the Central Bank of India (Reserve Bank of India) and the securities market regulator (Securities and Exchange Commission of India) are working with the depository on the matter, highlighting how regulatory-led infrastructure is being shaped to support tokenized offerings.

From the perspective of investors and market structures, the reliability of securities records and legal enforceability are crucial. DEMAT 2.0 's role in tracking ownership and balances is likely to determine whether tokenized bonds can easily interface with existing compliance requirements, custody practices, and settlement processes. [TAG

Timeline: Lock-up period, limited access and possible secondary market

Reuters said the pilot will initially be open only to certain groups of investors. The report also hinted that the project could be unveiled at the annual fintech event in Mumbai in September, meaning its launch would be strictly limited in scope and aimed at controlled testing rather than immediate widespread distribution.

It is reported that these tokenized bonds have an initial lock-up period of three months. After that, the exchange is expected to establish a secondary market for tokenized bonds by December, Reuters reported.

For participants, these milestones determine the practical use of the tool. Lock-in periods may restrict liquidity at an early stage, and plans for secondary market transactions before December suggest the project intends to go beyond mere issuance pilots. Whether the secondary market will be actively traded, what market-making or trading rules apply, and how the price discovery mechanism works will all be key issues of concern to observers.

Regulators have not commented yet

This media contacted the Central Bank of India, the Securities and Exchange Commission of India and REC Limited about the above-reported plan, but no response was received as of press time. The lack of official confirmation means investors should view details such as amounts, access, wallet structure and exchange schedules as reported progress rather than finalized policies. Still, the fact that multiple regulators and market infrastructure providers are described as working together suggests that the pilot is part of a broader effort to put tokenized securities into practical operation within existing regulatory frameworks.

As the September pilot approaches, the most important signals may come from whether DEMAT 2.0 is ready to handle real bond positions, how wholesale central bank digital currency wallet integrations for participating banks will be handled, and what guidance the Securities and Exchange Commission of India and the Bank of India will ultimately issue on market conduct, settlement finality and secondary market trading rules.