Following REC’s successful digital bond issuance, Larsen & Toubro prepares to test the tokenisation concept further, signalling a potential shift in India’s bond market infrastructure.
India’s first completed tokenised corporate bond sale has quickly turned from a one-off experiment into a possible template for other issuers, with Larsen & Toubro preparing a similar fundraising this week after REC’s debut on Monday 7 September 2026. Mint reported that L&T could seek as much as ₹500 crore through three-year notes expected to carry a coupon of about 7.40%, a sign that bankers already see demand beyond the inaugural transaction.
REC, the state-backed power financier, raised Rs 5 billion through notes maturing on 31 May 2028 with a 7.30% coupon, according to Bloomberg reporting carried by Moneycontrol. About 20 investors took part, including banks, mutual funds and corporates. Among the buyers were HDFC Bank and ICICI Bank, while Axis Bank and Yes Bank were also named as subscribers alongside AK Capital Services, ICICI Securities Primary Dealership, Taurus Group and Trust Investment Advisors. HDFC Bank said it acted as one of the arrangers, but did not say whether it also bought the bonds.
What made the deal unusual was not the credit itself but the plumbing behind it. Reuters reported in August that the pilot had been designed around the Reserve Bank of India’s wholesale central bank digital currency and a separate electronic securities wallet, branded DEMAT 2.0, with holdings recorded on a distributed ledger. The pilot was meant for a limited group of investors rather than the wider market. The Paypers, in its August account of the scheme, said that structure would place India alongside Europe and Hong Kong in using blockchain-based rails for bond issuance and settlement.
The sale was also more tightly controlled than a conventional private placement. Reuters said investors needed two digital accounts: a wholesale CBDC wallet provided by a bank and the new securities wallet being developed by the depositories. One source told Reuters that “Subsequent trades can take place only between participants that hold both compatible CBDC and securities wallets.” That restriction underlines how early the project still is, even as the first issue has now been executed.
The route to Monday’s deal had been mapped out weeks earlier. Reuters reported on 24 August that REC had been selected as the first issuer in a pilot expected to be unveiled at a financial technology event in Mumbai in September, with a target size of less than Rs 5 billion. By 4 September, another Reuters update said the timetable had hardened: bidding was due on Monday, the base issue size was set at Rs 1 billion and REC had a greenshoe option to retain a further Rs 4 billion. Mint later said that full amount was indeed taken up, confirming that the eventual fundraising matched the top end of the original structure.
That does not mean liquidity has been solved overnight. Reuters also reported that the bonds would carry an initial three-month lock-in, that exchanges were expected to develop a secondary market for tokenised bonds by December 2026, and that the securities would not trade on the conventional electronic book provider platform. Those design choices suggest the immediate gain is operational testing rather than a fully open market in which bonds can change hands freely from day one.
Supporters argue that the operational gains are precisely the point. Moneycontrol reported Amar Gandhi, founder and managing director of Taurus Group, which both invested in and helped arrange the REC offer, as saying: “The most significant potential benefit of tokenization is speed and settlement efficiency.” In practice, the attraction is that pairing tokenised securities with central bank money could compress allotment, payment and settlement into a far shorter process than the existing chain of intermediaries normally allows.
The bigger question now is whether the REC pilot remains a niche institutional exercise or becomes the start of a broader market. Mint said other state-owned financial institutions were already studying tokenised borrowing, while L&T’s planned sale would test whether a private-sector corporate can follow quickly and at a coupon close to REC’s. The Paypers noted before launch that the Indian project was part of a joint push by the central bank and the market regulator, suggesting that the experiment is as much about future market infrastructure as about one issuer’s funding need.
For now, the evidence points both ways. The buyer list shows blue-chip participation and the deal cleared at its full Rs 5 billion size, indicating genuine institutional interest. But the requirement for specialist wallets, the lock-in period and the still-unbuilt secondary market mean tokenised bonds are not yet a direct substitute for mainstream corporate debt issuance. If L&T proceeds this week, the next test will be whether the pilot begins to look repeatable rather than merely historic.
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