India's REC Limited to Launch ₹5 Billion Tokenized Corporate Bond Auction

India's state-owned power financing company, REC Limited, is set to launch an auction for tokenized corporate bonds worth up to ₹5 billion. The tokenized bonds will have a maturity of 1 year and 8 months, with a base issuance size of ₹1 billion and a green shoe option allowing for an additional ₹4 billion in case of oversubscription. The auction is scheduled for September 7. This issuance is an experiment to record ownership and settlement of corporate bonds on a distributed ledger, with the Reserve Bank of India's wholesale digital rupee (e₹-W) being used as the settlement method. Investors must have a central bank digital currency wallet and a securities wallet provided by banks to participate in the auction. Initial investors will be limited, and the bonds will be subject to a 3-month lock-up period. Exchanges have reported that they can prepare a secondary market for tokenized bonds by December. If the issuance proceeds as planned, the Indian bond market will test transactions combining central bank digital currency and tokenized securities wallets.

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