HDFC Bank and ICICI Bank have purchased India's first tokenized bond issued by state-run REC Ltd., raising $52.9 million in the transaction. The two lenders were among roughly 20 institutional investors who participated in the offering, according to people familiar with the matter.
REC, which finances and invests in the power sector, issued the bond as a ₹5 billion ($52.9 million) pilot. The use of blockchain infrastructure for the issuance marks the first time an Indian corporate has tokenized a bond, moving beyond government securities that have been tested on distributed ledgers in pilot programs across Asia.
Tokenized bonds allow issuers to settle trades on blockchain networks, potentially reducing settlement times and custodial intermediaries. The mechanism has drawn interest from regulators and institutional investors in markets including Singapore, Hong Kong and the European Union, where pilots have tested the technology on government debt. India's Securities and Exchange Board has been exploring frameworks for tokenized securities since 2023, though no formal rules have been finalized.
REC is a state-owned non-banking finance company that lends to India's power generation, transmission and distribution sectors. The company's participation in debt capital markets has historically attracted domestic institutional investors, including banks, pension funds and insurance companies. The central government has been pushing to modernize India's debt infrastructure, which remains dominated by traditional settlement platforms.
HDFC Bank and ICICI Bank are India's two largest private lenders by assets and regularly purchase debt from state-run entities. Both are significant investors in corporate bonds. The transaction was completed by September 7, according to reporting on the issuance.
Tokenized bond issuances remain rare globally. The World Bank, Asian Development Bank and several governments have run pilots, but corporate adoption outside pilot programs remains limited. REC's transaction is among the first corporate-issued tokenized bonds to reach institutional investors at material scale.
The transaction reaches roughly $53 million, or about one-tenth the size of a typical week of REC's conventional bond issuances. If Indian corporates and the central government expand tokenized offerings, the mechanism could increase settlement efficiency and reduce friction in a debt market where institutional participation has grown steadily since reforms to the corporate bond market began in 2015. The regulatory framework that governs tokenized securities in India and whether exchanges and custodians adopt the infrastructure remain open questions.
