India's First Tokenised Bonds Total ₹1,025 Crore, Use Digital Rupee
Three Indian firms issued the digital debt securities, marking a shift towards blockchain-based settlement and reduced transaction risks, according to a PPFAS report.
India's Digital Bond Debut
India has introduced its first tokenised bonds, with initial issuances totalling ₹1,025 crore, according to a PPFAS report published in the July–September 2026 edition of The Tortoise Lens. These digital debt securities represent conventional bonds managed through digital technology. State-owned REC issued ₹500 crore, while Larsen & Toubro (L&T) also raised ₹500 crore.
IIFL contributed ₹25 crore to these inaugural issuances, which leverage blockchain-based technology for recording ownership and settling payments.
Digital Rupee Powers Atomic Settlement
A key feature of the new system is the use of the Reserve Bank of India's (RBI) central bank digital currency (CBDC), known as the digital rupee, for transaction settlement. The PPFAS report explains that tokenised bonds utilise a Unified Market Interface (UMI) to enable atomic settlement, where the transfer of securities and payments occurs simultaneously.
This mechanism, facilitated by a regulatory sandbox from the Securities and Exchange Board of India (SEBI), significantly reduces the risk of one party failing to complete its side of a transaction.
Demat 2.0 and Market Access
The ownership of these tokenised bonds is recorded through Demat 2.0, an extension of India's existing dematerialised account framework. Mansi Kariya, Associate Vice President and Fund Manager, Debt, at PPFAS Mutual Fund, noted in the report that investors will not require a new know-your-customer (KYC) process for this structure.
While tokenised bonds remain visible via existing depository interfaces, participation in the current pilot requires a CBDC wallet and is presently restricted to institutional investors, excluding retail participation.
Efficiency Gains and Liquidity Hurdles
The digital system promises faster transactions, more efficient settlement, and reduced reliance on intermediaries, as traditional bond processes often take two to three days. However, the PPFAS report cautions that tokenisation does not remove the issuer's credit risk.
While secondary market trading is expected to begin after three months on the existing Request for Quote (RFQ) platform, Kariya identifies liquidity as a primary challenge. India's approach differs from initiatives in Hong Kong, Switzerland, and Singapore by using regulated depositories and central bank money.
This article is journalism, not investment advice; consult a licensed professional before making financial decisions. Market data is indicative, may be delayed, and should be verified with your broker or exchange before use.
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