HDFC, ICICI and other banks buy REC’s first tokenised bond
NEWZA Editorial Team•
⚡ Key Financial Takeaways
REC Ltd. raised ₹5 billion by issuing a tokenised bond due May 2028 with a 7.30% coupon.
HDFC Bank, ICICI Bank, Axis Bank, Yes Bank and other investors bought the bonds using the RBI’s digital currency.
The pilot demonstrates how blockchain and central bank digital currency can speed settlement and improve transparency in corporate bond trading.
Larsen & Toubro is also planning a tokenised bond issue of up to ₹5 billion, indicating broader market interest.
💡 Why It Matters
The transaction demonstrates that tokenised bonds can be issued, subscribed and settled efficiently using central bank digital currency, potentially improving liquidity, transparency and speed in India’s corporate bond market. It also shows that major banks are willing to invest in such instruments, signalling confidence in the technology.
REC’s first tokenised bond State‑run REC Ltd. has completed the sale of its inaugural tokenised bond, a ₹5 billion ($52.9 million) issue due in May 2028 with a 7.30% coupon. The bonds were bought by a mix of banks, mutual funds and corporates, with the transaction settled through the Reserve Bank of India’s digital currency.
Major banks among the buyers HDFC Bank and ICICI Bank were among the largest subscribers, with Axis Bank and Yes Bank also taking a stake. Other participants included AK Capital Services, ICICI Securities Primary Dealership, Taurus Group and Trust Investment Advisors. HDFC Bank confirmed its role as an arranger but did not comment on its purchase.
Blockchain and digital‑currency integration Tokenised bonds use blockchain technology for issuance, trading and settlement. The REC pilot linked the tokenised securities to the RBI’s digital currency, allowing faster payment, allotment and settlement. Taurus Group’s Amar Gandhi highlighted that this integration could significantly reduce settlement times and increase market transparency.
Implications for India’s corporate bond market The successful sale signals that tokenisation can enhance liquidity and efficiency in India’s corporate bond market. By reducing settlement friction, issuers and investors may find it easier to trade and hold bonds, potentially attracting more participants.
A broader trend Larsen & Toubro, India’s largest engineering firm, is also seeking bids for a three‑year tokenised note of up to ₹5 billion. While L&T has not yet responded to queries, the move suggests that other large corporates are exploring the same technology.
Next steps The REC pilot will be monitored closely by regulators and market participants. If the tokenised bond continues to perform well, it could pave the way for a wider adoption of blockchain‑based debt instruments across India’s capital markets.
🏛️ Background & Context
Tokenisation applies blockchain to securities, creating digital tokens that represent ownership. In India, the RBI has been exploring digital currency for payments and settlement. REC, a state‑run power financier, has been a pioneer in experimenting with tokenised debt to modernise its financing mechanisms.
👁️ What To Watch Next
Regulators may issue guidelines on tokenised bonds. Other corporates, such as L&T, are likely to follow REC’s lead. Market participants should watch for further issuances and any changes in settlement timelines or regulatory approvals.
