NSE Facilitates India’s First Tokenised Bond Issuances Worth ₹1,000 Crore on EBP

The National Stock Exchange of India (NSE) has enabled India’s first tokenised corporate bond issuances worth a combined ₹1,000 crore on its Electronic Bidding Platform (NSE EBP). REC Limited raised ₹500 crore on 7 September 2026 and Larsen and Toubro (L&T) raised ₹500 crore on 9 September 2026 under the Securities and Exchange Board of India’s Regulatory Sandbox. The technology was unveiled on 10 September 2026 at the Global Fintech Fest 2026 in Mumbai, marking the start of bond tokenisation in India within the regulated market.

What Is a Tokenised Bond?

A tokenised bond is a regular corporate bond issued as a native digital token on a Distributed Ledger Technology network instead of a conventional electronic entry. It carries the same ISIN, coupon, maturity, rating and legal rights. Only the method of recording ownership and settlement changes.

Bond tokenisation means converting the ownership record of a bond into a digital token that lives on a shared electronic ledger. Distributed Ledger Technology (DLT) is a system in which the same record is maintained at the same time across computers operated by authorised institutions, instead of sitting in one central database. A digital bond in this context is therefore not a new type of security or a crypto asset. It is the same corporate bond, with the same promise by the issuer to pay interest and repay principal, recorded in a new technical form.

In India’s pilot, the bond is created directly as a token on a private and permissioned DLT network. Private means it is not open to the public like public blockchains. Permissioned means only approved institutions such as depositories and stock exchanges can operate nodes and validate entries. The token keeps the same International Securities Identification Number (ISIN), which is the unique 12 character code given to each security issue, along with the same coupon rate, maturity date, covenants, credit rating and investor rights. The law also does not change. A tokenised corporate bond remains a security under the Securities Contracts (Regulation) Act, 1956 and continues to be governed by the same disclosure, listing, rating, debenture trustee and investor protection rules.

First Tokenised Bond Issuances on NSE EBP

The National Stock Exchange of India announced on 17 September 2026 that its Electronic Bidding Platform had enabled India’s first tokenised bond issuances. Two issuances on NSE EBP accounted for ₹1,000 crore. A third smaller issuance on another exchange took the total pilot size to ₹1,025 crore.

REC Limited, a public sector non banking finance company focused on power sector lending, was the first issuer. Its issue had a base size of ₹100 crore with a green shoe option of ₹400 crore. A green shoe option allows an issuer to accept extra bids beyond the base size up to a stated limit. The REC issue received subscription of 7.9 times the base size, and REC accepted the full ₹500 crore at a coupon rate of 7.30 percent. Participants included State Bank of India, HDFC Mutual Fund, SBI DFHI, Central Depository Services (India) and other banks, primary dealers, mutual funds and arrangers such as Axis Bank, HDFC Bank, ICICI Bank and SBI Capital Markets.

Larsen and Toubro Limited, a private sector engineering and infrastructure group, followed with a ₹500 crore issue on 9 September 2026. Its participation showed that the technology works for both public and private issuers. Investors included State Bank of India, Yes Bank, HDFC Mutual Fund and SBI Mutual Fund, with Trust Investment Advisors, Axis Bank and Yes Bank acting as arrangers. Reports placed the expected coupon for the three year L&T bonds at around 7.40 percent. IIFL Finance Limited, a private non banking finance company, raised ₹25 crore on the same day on another exchange platform.

The technology was formally unveiled on 10 September 2026 at the Global Fintech Fest 2026 in Mumbai by Reserve Bank of India Governor Sanjay Malhotra and Securities and Exchange Board of India Chairperson Tuhin Kanta Pandey (as of September 2026). The initiative was carried out with guidance and support from both regulators.

NSE Electronic Bidding Platform Framework

The NSE Electronic Bidding Platform (NSE EBP) is the electronic system used for private placement of debt securities. Private placement means bonds are offered to a selected group of institutional investors rather than to the general public through a public issue. The platform handles bidding, price discovery and allotment in a transparent and time bound manner.

NSE, which was incorporated in 1992, recognised as a stock exchange in 1993 and started operations in 1994, is headquartered in Mumbai. It introduced screen based electronic trading in India and launched its electronic book building platform for private placement of debt securities in 2016. The platform is now governed by the master circular for issue and listing of non convertible securities dated 22 May 2024 and later updates, including the review circular of 16 May 2025.

Under the current framework, private placement of debt securities, non convertible redeemable preference shares and municipal debt securities of ₹20 crore or more must use the EBP platform. This covers a single issue including the green shoe option, a shelf issue with multiple tranches totalling ₹20 crore or more in a financial year, and any later issue once past issues in that year cross ₹20 crore. Smaller issues and other instruments such as commercial paper, certificates of deposit, securitised debt and units of Real Estate Investment Trusts and Infrastructure Investment Trusts can also use the platform voluntarily.

The standard process has four stages. First, the issuer obtains in principle approval for listing and shares the placement memorandum and term sheet with the exchange at least two working days before bidding, or three working days for a first time issuer. The term sheet sets out the issue size, green shoe limit, coupon type, bidding mode and settlement cycle. The green shoe portion cannot exceed five times the base issue size. Second, bidding takes place between 9 a.m. and 5 p.m. on working days for at least one hour. Bids can be in an open format, where bid values are visible during bidding, or a closed format, where only cumulative totals are shown. Third, allotment is done on yield priority, with bids arranged from the lowest yield sought by investors and a cut off yield fixed by the issuer. Bids at the cut off yield share allotment on a pro rata basis. Fourth, successful bidders pay funds through the clearing corporation on a T plus 1 or T plus 2 cycle, where T is the bidding end date, and securities are credited to demat accounts after payment.

In the tokenised pilot, this same EBP workflow was kept intact. Bidding, modification, cancellation and allotment followed existing timelines. The change came after allotment. The depository credited tokenised bonds to the investor’s Demat 2.0 account, which is an extension of the investor’s existing demat account and not a separate account, and the issuer received the money in its wholesale central bank digital currency wallet.

Demat 2.0 and the SEBI Regulatory Sandbox Framework

Demat 2.0 is the pilot project for tokenisation of corporate bonds announced by the Securities and Exchange Board of India on 10 September 2026. SEBI, which was established in 1988 and given statutory powers through the SEBI Act, 1992, is headquartered in Mumbai and regulates the securities market. Demat 2.0 is described as the next step after dematerialisation. In 1996, India moved from paper certificates to electronic balances held with depositories. Demat 2.0 tests whether those electronic balances can now be held as native tokens on a shared ledger without changing the legal nature of the security.

The pilot runs under the SEBI Regulatory Sandbox Framework, 2020, introduced through circular dated 5 June 2020. A regulatory sandbox is a live testing environment where regulated entities can test new products or technologies on a limited set of real customers for a limited period, with specific relaxations and close monitoring. SEBI had earlier created an Innovation Sandbox in 2019 for offline testing by firms not regulated by it. The Regulatory Sandbox is different because testing happens live and the applicant must be an entity registered with SEBI, which remains responsible even if it uses a financial technology firm for support. Testing can last up to twelve months and can be extended on request. No exemption is given from investor protection, Know Your Customer and Anti Money Laundering rules.

Three technical features define the Demat 2.0 design. The first is a shared ledger owned by the depositories. The two national depositories are Central Depository Services (India) Limited and National Securities Depository Limited. Initially, nodes are operated by depositories and stock exchanges, with technology and implementation support from the National Payments Corporation of India. The second is settlement in central bank money. Demat 2.0 is linked to the Reserve Bank of India’s wholesale Central Bank Digital Currency (e₹) through the Unified Market Interface (UMI). Central Bank Digital Currency is digital money issued directly by the central bank. Wholesale CBDC is the version used by banks and institutions for large value settlement, as distinct from retail CBDC used by the general public.

The third feature is atomic settlement, also called atomic Delivery versus Payment. This means the bond leg and the money leg move together as one linked transaction. Either both settle or neither settles. This removes the gap between giving securities and receiving money, and with it the risk that one side defaults after the other side has performed. The pilot also uses smart contracts, which are instructions written into the ledger that execute on their own when conditions are met. Interest and redemption payments can be triggered automatically on the due date and credited in e₹ to the bondholder’s CBDC wallet. At present, the issuer or its registrar must take the holder list from the depository, calculate the amount for each holder and pay separately through banks. On a shared ledger, authorised institutions see the same holder details at once, which reduces file sharing, reconciliation and manual errors.

For investors, participation is kept simple. Tokenised bonds stay in the existing demat account, so no new securities account and no fresh Know Your Customer process is needed. The investor only needs to enable Demat 2.0 with the depository and hold a wholesale CBDC wallet with a participating bank for the funds leg. The safeguards remain unchanged. Credit rating, debenture trustee, listing, disclosure, valuation and eligibility rules apply in full. The bonds are meant to trade in the same manner as bonds held in demat form, so the market is not split into separate segments.

Corporate Bond Market Context and NSE Bond Infrastructure

A corporate bond is a debt paper through which a company borrows money from investors for a fixed period and promises to pay regular interest and return the principal on maturity. In India, most corporate bonds are placed privately with banks, mutual funds, insurance companies, provident funds and other qualified institutions, and many are rated AAA, which is the highest credit rating and signals the lowest risk of default. The corporate bond market in India remains smaller than the government securities market and bank lending channel. Policymakers have therefore tried to deepen it through electronic platforms for issuance, listing and trading.

The NSE bond market infrastructure includes the EBP for primary issuance and the Request for Quote (RFQ) platform for secondary trading. The RFQ platform allows buyers and sellers to seek quotes electronically for debt securities. The tokenisation pilot is designed to connect with this existing structure rather than create a parallel market. In the first phase, issuance and asset servicing are tested on the ledger with mainly institutional participation and same day receipt of funds by the issuer, compared with the two to three days generally needed earlier. Later phases are expected to extend to buying and selling through existing RFQ systems and to access for retail investors. Secondary sale proceeds could also reach sellers immediately instead of after two to three days.

India’s approach differs from pilots abroad. Tokenised bonds have been tested in places such as Switzerland, Hong Kong, Singapore and the Philippines, and by institutions such as the European Investment Bank and private issuers. Those efforts largely involved individual issuers on separate platforms. India is the first country where corporate bonds have been issued natively on a distributed ledger with the ownership record held by the country’s statutory depositories and the funds leg settled in central bank digital currency, all within the existing regulated infrastructure. This design is expected to improve audit traceability, keep confidentiality controlled through a permissioned network, and integrate securities settlement with central bank money settlement.

Significance and the Way Forward

The immediate significance lies in speed, cost and risk. Issuers can receive funds on the same day as bidding. Issuance and servicing costs are expected to fall as manual steps are automated. Settlement risk is reduced because atomic settlement prevents one leg from settling without the other. Intermediaries handle fewer files and reconciliations, and investors can redeploy money faster. Automated servicing also lowers the chance of delays or errors in interest and redemption payments.

For the market, the pilot tests whether India can scale digital bond infrastructure without weakening regulation. Because the legal character of the bond and all investor safeguards stay the same, the experiment focuses only on plumbing. If the first phase succeeds, the next tests will cover secondary trading, wider institutional use and eventual retail access. The experience will also guide decisions on cyber security, scalability, resilience, auditability, settlement finality and the roles of depositories, exchanges, clearing corporations and banks.

The pilot will be taken forward in phases, and issuances under the first phase are continuing. Later phases will extend to trading through RFQ platforms and to retail participation. The lessons from these stages will decide whether tokenised issuance can be rolled out more widely and whether the model can be extended to other instruments. For now, the REC and L&T issuances show that both public and private issuers can raise large sums through tokenised routes on NSE EBP while staying inside the regulated system.

Key Takeaways

• NSE enabled India’s first tokenised corporate bond issuances worth ₹1,000 crore on NSE EBP, with REC raising ₹500 crore on 7 September 2026 and L&T raising ₹500 crore on 9 September 2026.
• The REC tokenised issue had a base size of ₹100 crore, a green shoe option of ₹400 crore, 7.9 times subscription and a 7.30 percent coupon rate.
• The technology was unveiled on 10 September 2026 at the Global Fintech Fest 2026 in Mumbai and runs under SEBI’s Regulatory Sandbox Framework, 2020.
• Demat 2.0 creates the bond as a native digital token on a private permissioned DLT network owned by depositories, while the bond keeps the same ISIN and legal character under the Securities Contracts (Regulation) Act, 1956.
• Settlement uses RBI’s wholesale CBDC (e₹) through the Unified Market Interface to achieve atomic Delivery versus Payment, with servicing automated through smart contracts.