On September 7 local time, REC, a financial company under India's Ministry of Power, announced in a stock exchange filing that it had completed an issue of 5 billion rupees in tokenized corporate bonds. A tokenized corporate bond uses a digital token to record an investor's ownership of the bond received in return for lending money to a company. The company described it as India's first pilot issue of tokenized corporate bonds within a regulatory sandbox, a framework for testing new financial approaches under the supervision of the Securities and Exchange Board of India (SEBI), the country's securities market regulator. The issue comprised a base amount of 1 billion rupees and 4 billion rupees in additional capacity that could be used depending on demand, with an annual interest rate of 7.30% and a maturity of one year and nine months. Bids totaling 7.96 billion rupees were submitted on the electronic bidding platform of the National Stock Exchange of India (NSE). According to REC, investor pay-in, bond allotment, and listing on both the NSE and the Bombay Stock Exchange (BSE) took place on the same day. The company said it had introduced a system that records securities ownership on a distributed ledger accessible to authorized participants and uses delivery-versus-payment to link the transfer of securities with payment so that both occur together. However, the filing did not separately disclose the precise dates and times of issuance and settlement, the number of participating investors, secondary-market trading volume, or access conditions for retail investors.
India's REC Completes 5 Billion Rupee Tokenized Corporate Bond Issue; Pay-in, Allotment and Listing on the Same Day
Metanomia View
The REC case shows a path for tokenization to become part of existing financial institutions' operations. Linking the recording of securities ownership with payment within the existing exchange and supervisory framework is an approach that implements established market rules on a distributed ledger. In this case, existing exchanges and financial institutions continue to participate in the issuance and listing of tokenized securities, and tokenization does not automatically mean an open market where anyone can trade. As South Korea builds systems for issuing and settling tokenized securities, it also needs to examine how investor rights are verified and who is responsible when failures occur, alongside settlement time and cost.