State-owned power financier REC Ltd. is seeking investor bids for as much as 5 billion rupees ($53 million) of tokenized bonds, marking India's first debt issuance on a blockchain, according to people familiar with the matter.
The move comes as India's government and financial regulators have begun allowing digital asset experiments within the debt market. REC, which finances power projects across the country, is among the first state entities to test tokenization as a tool to broaden the investor base and reduce settlement friction in a market traditionally dominated by physical certificates and bank intermediaries.
Tokenization converts a financial instrument into a digital token recorded on a distributed ledger, typically allowing faster settlement and easier fractional ownership. In India's government securities market, the Reserve Bank of India has already piloted tokenized versions of its own bonds. REC's issuance, if completed, would extend the model to a state-owned enterprise in the infrastructure finance sector.
REC's annual lending to India's power sector exceeded 1 trillion rupees in recent fiscal years. The company raises funds through bond sales to finance renewable energy and thermal power projects. A successful tokenized issuance could lower the cost and time required to distribute bonds to institutional investors across India and potentially abroad.
In August 2024, the Reserve Bank permitted tokenization pilots for government bonds. The Securities and Exchange Board of India has not yet issued formal rules for tokenized corporate debt, though it has permitted market-driven experimentation in this area.
If REC's offering closes at the announced size, it would rank among the largest tokenized corporate bond sales globally. The investor response will test whether Indian institutional buyers, pension funds, insurance companies, and banks, have operational readiness to settle tokenized debt instruments at scale.
REC's success or failure in attracting bids will likely shape how quickly other Indian state-owned enterprises and corporations move to tokenize their own debt. The first 30 days after launch will clarify whether the pricing, settlement mechanics, and custody arrangements prove acceptable to the institutional market.
