The Securities and Exchange Board of India (SEBI) has confirmed plans for a corporate bond trial using tokenization and distributed ledger technology, noting the intention in its annual report. It wants to explore “faster settlement, operational efficiencies, programmability through smart contracts and integration with CBDC-based settlement mechanisms.” Additional details were not made available. SEBI Chairman Tuhin Kanta Pandey first announced the pilot in late May at the CareEdge Debt Market Summit, saying it would start on a limited scale over six to nine months.
One of the goals may be to standardize a relatively fragmented corporate bond market. That said, very few of the large digital bond issuances elsewhere have been by corporates, although there have been plenty by SMEs. The vast majority of large issuances have been sovereign, supranational and agency (SSA) bonds, or by financial institutions. Examples of corporate bonds include two issuances by Siemens totaling €360 million and the $100 million digital bond issued by Korea’s POSCO International in Hong Kong. Both of these companies have leaned into blockchain heavily.
For India’s trials, the central bank has its retail and wholesale CBDC, the pilot digital rupee, and in October last year launched the CBDC and Asset Tokenisation (CAT) Sandbox, but for simulation purposes only. The wholesale CBDC use cases include settlement of government securities, settlement of inter-bank lending and borrowing in the call money market and the tokenized issuance and settlement of certificates of deposit.
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