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MUMBAI, Aug 24 (Reuters) - India will launch tokenised corporate bonds next month, as it tests the use of blockchain technology to enable instant settlement of bond transactions, three sources with direct knowledge of the matter said on Monday.
The notes, to be issued for the first time by state-owned power financier REC, would place India alongside markets such as Europe and Hong Kong in using the technology for issuance and settlement.
Tokenised bonds are securities whose ownership, issuance, trading and settlement are recorded digitally on a blockchain or distributed ledger, allowing transactions to be completed almost instantly.
India's markets regulator and central bank are working together on pushing the technology, according to the sources, who spoke on the condition of anonymity as the discussions are ongoing and confidential.
REC will issue tokenised bonds worth less than 5 billion rupees ($57 million) in the offering, the sources said.
The offering is expected to be unveiled at an annual financial technology event in Mumbai next month, one of the sources said.
India's central bank digital currency will be used to buy the tokenised bonds, one of the sources said.
Details about the issuer, timeline and framework have not been reported previously.
"The offering would be made available to only a select group of investors at the pilot stage," one of the sources said.
Reuters could not ascertain the names of the investors.
The central bank, markets regulator and REC did not respond to emails seeking comment.
To tap the bonds, investors will need to access two digital accounts: a wholesale digital currency wallet provided by a bank, and a new electronic securities wallet, the sources said.
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