India reportedly plans to launch its first tokenized corporate bonds in September as part of a pilot that would use blockchain-based transactions settled with a central bank digital currency (CBDC).

REC Limited, a state-controlled Indian power infrastructure finance company, plans to issue less than 5 billion Indian rupees ($57 million) in tokenized bonds, Reuters reported on Monday, citing three sources with direct knowledge of the plans. The pilot would initially be limited to a select group of investors and could be unveiled at an annual financial technology event in Mumbai in September.

“India’s central bank digital currency will be used to buy the tokenized bonds,” Reuters reported, citing one of the sources. To participate, investors will need two digital accounts: a wholesale CBDC wallet provided by a bank and a new electronic securities wallet.

Indian securities depositories are developing the new wallet, called DEMAT 2.0, which will record bond holdings using distributed ledger technology. The Reserve Bank of India (RBI), the country’s central bank, and the Securities and Exchange Board of India (SEBI), its markets regulator, are working together on the initiative, according to Reuters. The setup points to an early test of how existing market infrastructure can handle tokenized debt while keeping issuance and settlement inside regulated channels.

The bonds are expected to carry an initial three-month lockup period, and exchanges are expected to develop a secondary market for the tokenized bonds by December. That timeline gives market participants a limited initial window before broader trading infrastructure would need to support the new format.

Cointelegraph contacted the RBI, SEBI and REC for comment on the reported plans but had not received responses at the time of publication.

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