L&T plans to raise up to ₹500 crore via tokenized bonds after REC's success, marking new era for debt markets

Rural Electrification Corporation Ltd (REC) has successfully raised ₹500 crore through India's first-ever tokenized corporate bond issuance, signaling a significant shift in the nation's debt market infrastructure. The bonds, which mature on May 31, 2028, were issued with a 7.30% coupon rate, utilizing a blockchain-based platform developed under the guidance of the Reserve Bank of India and the Securities and Exchange Board of India. Following this milestone, Larsen & Toubro Ltd is preparing to launch its own tokenized bond issue this week, aiming to raise up to ₹500 crore at an expected 7.40% coupon. This initiative leverages the RBI’s wholesale central bank digital currency (CBDC) for payments and a "DEMAT 2.0" blockchain wallet for secure asset holding. By moving away from traditional settlement systems, these tokenized instruments aim to enable near-instant settlement and enhanced transparency for market participants. The adoption of this technology is expected to reduce settlement risks and potentially allow for fractional ownership, which could broaden investor participation in corporate debt. While the pilot project marks a major technological advancement, market participants emphasize that scaling the ecosystem will require further development of secondary market liquidity and supporting infrastructure.