REC Issues India's First Tokenized Corporate Bonds

REC Limited, a Maharatna Central Public Sector Enterprise under the Ministry of Power, has made history by issuing India's first pilot issue of tokenized corporate bonds under the Securities and Exchange Board of India (SEBI) Regulatory Sandbox Framework.

The pilot issue, which was undertaken on the EBP platform of the National Stock Exchange of India Limited (NSE), had a base issue size of ₹100 Crore with a green shoe option of ₹400 Crore, totaling ₹500 Crore. The issue received an overwhelming response from investors, with a book building of ₹796 Crore, resulting in an oversubscription of ~8x.

REC has accepted ₹500 Crore at a coupon rate of 7.30% per annum for a tenor of 1 year 9 months. The success of this pilot issue demonstrates the forward-looking vision and coordinated commitment of SEBI, the Reserve Bank of India (RBI), and all participating Market Infrastructure Institutions (MIIs), including NPCI, depositories, and stock exchanges.

The tokenized mode enabled faster settlement, with pay-in, allotment, and listing of the bonds on the same day. The bonds are listed on both the NSE and BSE Limited. This innovative approach introduces atomic Delivery-versus-Payment (DvP) settlement and shared-ledger transparency, representing a transformative leap forward in India's capital market.

Rajesh Kumar, Director (Finance) at REC, expressed his appreciation to SEBI for its visionary leadership in strengthening India's capital markets through progressive regulations, active stakeholder consultation, and technology-driven reforms. He also highlighted the significance of the Demat 2.0 initiative and tokenization of corporate bonds, which represent a landmark step in the evolution of India's debt markets.

Through Demat 2.0, securities ownership is securely recorded and tracked on a permissioned distributed ledger, eliminating settlement risks and operational friction while maintaining statutory safeguards and institutional compliance. This development is expected to enhance the depth and resilience of India's financial markets.

The success of this pilot issue is a testament to the growing confidence of investors in India's capital markets and the potential of tokenized corporate bonds to revolutionize the way securities are issued and traded. As the Indian economy continues to grow and evolve, innovations like these will play a crucial role in shaping the future of the country's capital markets.

In conclusion, the issuance of India's first tokenized corporate bonds by REC Limited marks a significant milestone in the development of the country's capital markets. With its potential to increase efficiency, transparency, and investor confidence, this innovation is expected to have a lasting impact on the Indian economy.

The Indian government and regulatory bodies have been actively promoting the development of the country's capital markets, and this initiative is a step in the right direction. As the use of tokenized corporate bonds becomes more widespread, it is likely to attract more investors and issuers, leading to increased liquidity and depth in the market.

Overall, the issuance of tokenized corporate bonds is a positive development for India's capital markets, and it is expected to contribute to the country's economic growth and development in the long run.