India to pilot monetized corporate bonds in September! Settlement will be done using a central bank-issued CBDC, aiming to capture the RWA (Retail Asset Management) market worth hundreds of billions.

India is reportedly preparing to launch its first pilot program for tokenized corporate bonds in September. The state-owned power infrastructure finance company, REC, will issue bonds worth less than 5 billion Indian rupees (over US$57 million), settled in the central bank’s wholesale CBDC. Investors will need to hold a wholesale CBDC wallet and the new electronic securities wallet DEMAT 2.0.
(Background: Breaking News! Taiwan’s Central Bank completes its “wholesale central bank digital currency” trial! General-purpose CBDC testing to begin at the end of September )
(Additional Background: Spain partners with Adhara Blockchain to launch CBDC: testing bank transactions and tokenized bond settlement within six months )
printIt is reported that India is preparing to launch its first pilot program for “tokenized corporate bonds” in September, issued by the state-owned power infrastructure financing company REC Limited, and using the Reserve Bank of India’s wholesale central bank digital currency (CBDC) as the settlement tool. This marks the first step taken by Asia’s second-largest economy in piloting central bank digital currencies and tokenization of physical assets (RWA).

According to multiple sources familiar with the matter who spoke to Reuters , REC plans to issue tokenized corporate bonds worth less than 5 billion Indian rupees (approximately US$57 million). The initial pilot program will only allow participation from a select group of investors and may be officially unveiled at an annual fintech event in Mumbai in September. The Reserve Bank of India (RBI) has stated that transactions will be settled using a wholesale CBDC, and investors will need to hold two digital accounts: a wholesale CBDC wallet provided by a bank and a new electronic securities wallet, “DEMAT 2.0”.

The Reserve Bank of India (RBI) and market regulator SEBI are working together on this project, and the securities custodian industry is also collaborating with both parties to develop the DEMAT 2.0 wallet, which uses decentralized ledger technology (DLT) to record bond holdings, with plans to establish a tradable, liquid secondary market for it in December.

From pilot programs to secondary markets: Three-month lockdown, December easing

These tokenized bonds will have a three-month lock-up period, and exchanges expect to establish a tradable secondary market by December, allowing investors to avoid locking up their positions indefinitely. For emerging markets where asset tokenization is still in its infancy, this “lock-up first, release later” approach is a typical pace for central banks to reduce pilot risks and gradually open up the market.

Overall, the Indian government is well aware that it can use “controlled innovation” to test a viable application scenario for CBDC, rather than directly competing with private stablecoins or exchanges. This has made “wholesale CBD + tokenized bonds” a standard playbook for countries to compete in.

The race to launch Asian CBDCs: Who’s the fastest, and what are they avoiding?

India’s approach is strikingly similar to Taiwan’s Central Bank’s completed wholesale CBDC trial. Both focus on “wholesale” rather than “retail” CBDCs because wholesale CBDCs have a controlled scale, can meet the clearing needs of financial institutions, and have lower trial-and-error costs. Spain has already tested interbank tokenized bond settlement through a partnership with Adhara Blockchain. In Taiwan’s current situation, the Central Bank explicitly advocates for a “wholesale-first” approach, consistent with India’s strategy. This shows that “wholesale CBD + tokenized bonds” is becoming the standard scenario for most countries that fit their national circumstances.

Observation point: Can DEMAT 2.0 become RWA infrastructure?

There are three key areas to watch next: First, will the Indian government follow up the REC pilot program by gradually expanding tokenization to more public and corporate bonds? Second, if DEMAT 2.0 is successful, can it provide a comparable legal settlement framework for private stablecoins and crypto assets? Third, will the liquidity in the secondary markets of exchanges be sufficient to support the market after the three-month lock-up period expires? These factors will shape the next phase of the RWA race in Asia.