India Plans September Pilot for Tokenized Corporate Bonds With Wholesale CBDC Settlement

India is set to run a pilot in September to test tokenized corporate bonds that would be issued on a blockchain-style ledger and settled using the central bank's wholesale CBDC. People familiar with the discussions said state-owned REC Limited may issue under 5 billion rupees (about $57 million) of bonds to a limited group of investors. The initiative is expected to be showcased at an annual fintech event in Mumbai in September. The pilot is designed to demonstrate delivery-versus-payment settlement using digital infrastructure. Investors would need two accounts: a wholesale CBDC wallet provided by a bank for payments, and a securities wallet being built by Indian depositories, dubbed "DEMAT 2.0," to hold the tokenized bonds. Ownership would be recorded on distributed ledger technology, enabling the asset and payment legs to interact within the same framework. The project extends India's earlier wholesale e-rupee work. The Reserve Bank of India began its wholesale CBDC pilot in 2022, initially focused on settling government securities. The new effort applies that approach to corporate debt and digitally native capital-market transactions, echoing experiments in Europe and Hong Kong that have highlighted potential efficiency gains through fewer reconciliation steps and shorter settlement cycles. Market structure details underscore the constraints of a permissioned network. The bonds are expected to be locked for three months, and trading would require compatible CBDC and DEMAT 2.0 wallets. A secondary market is anticipated to take shape by December, though the securities would not initially trade on conventional electronic platforms. The design also sharpens a broader debate over state-led digital finance. While tokenization can streamline securities markets, routing transactions through a government-controlled CBDC introduces questions around financial autonomy, privacy and access. Unlike open cryptocurrencies such as Bitcoin, which operate without a central issuer authorizing transactions, a wholesale CBDC remains under central bank control and can embed institutional rules directly into the payment layer.