The Securities and Exchange Board of India (SEBI) has formally decided to launch a pilot project for the tokenisation of corporate bonds using distributed ledger technology (DLT).
SEBI Chairman Tuhin Kanta Pandey confirmed the development on Tuesday while speaking at the CareEdge Debt Market Summit 2026 in Mumbai and in a separate interaction with reporters on the sidelines of the event.
“This is a pilot project that we have decided to initiate on use of the DLT, the digital ledger technology, for tokenization of corporate bonds,” Pandey told reporters, as reported by ANI. He added that the pilot will first be implemented on a limited scale before broader adoption is considered.
Tokenisation refers to the process of converting real-world financial assets into digital tokens that are recorded on distributed ledger systems such as blockchain networks. These systems allow multiple participants to record and synchronise data without relying on a central authority, which can reduce manual intervention, lower settlement times and improve transparency across the transaction lifecycle.
What the pilot will test
According to Pandey, the pilot project is designed to evaluate whether DLT-based tokenisation can make corporate bond trading and settlement more efficient than the existing systems in place.
“Once you do that, there will be a greater possibility of more liquidity and instantaneous autonomous settlements,” he said.
The regulator wants to assess whether tokenisation can deliver four specific outcomes: faster settlement cycles, improved traceability of bond transactions, automated servicing of corporate debt instruments and greater transparency for all market participants.
Pandey clarified that corporate bonds are already being traded under existing infrastructure, and the proposal is not a replacement but an exploration of whether DLT can add a layer of efficiency on top of what already exists. He said SEBI plans to bring all stakeholders together to build a technological and operational model for the pilot.
On the timeline, Pandey was clear that this will not happen overnight. “It will take some time as I said that we have decided… But it will take 6 to 9 months to see various stages,” he said.
Quantum risks on the radar
While outlining the potential benefits of tokenisation, the SEBI Chairman was careful to flag the risks that come with adopting new technology for financial market infrastructure.
“Of course, we also need to take on board the risks which are there on tokenization especially on the quantum side. We must move carefully, but we must remain open to useful innovation,” Pandey said, as reported by Mint.
Quantum computing has been a growing concern across the global financial and blockchain community because of its potential to break the cryptographic algorithms that currently secure distributed ledger systems. While the technology is still in its early stages, regulators worldwide have begun factoring it into their risk assessments for blockchain-based financial infrastructure.
DLT already in use across Indian depositories
The technology is not entirely new to India’s capital markets. Depositories National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) already use blockchain-based systems to monitor security creation and covenant compliance in non-convertible securities.
These systems track the lifecycle of corporate bonds digitally and reduce manual intervention and compliance risks. SEBI’s 2021 circular on “Security and Covenant Monitoring Using Distributed Ledger Technology” laid the groundwork for this adoption. What the regulator is now proposing goes a step further, using DLT not just for monitoring but for the actual tokenisation and settlement of bond instruments.
RBI final guidelines awaited for bond repo platform
Pandey also confirmed that the Reserve Bank of India has already issued draft guidelines related to the corporate bond repo platform, and the final framework is expected shortly.
“So far as our exchanges are concerned and SEBI is concerned, we are quite ready to launch it as soon as the RBI clears it,” Pandey said.
The corporate bond repo platform is a separate but related initiative aimed at deepening liquidity in the debt market. Stock exchanges are ready to go live with it the moment RBI approvals come through.
Separately, SEBI, the RBI and the finance ministry are also working on a market-making framework for the corporate bond market. Finance Minister Nirmala Sitharaman had announced this proposal in the Union Budget 2026 as part of broader efforts to improve bond market participation.
India’s corporate bond market: Scale without depth
Pandey used the CareEdge summit to lay out the broader context for why these reforms matter. India’s corporate bond market has grown significantly over the past decade, with outstanding bonds rising from around Rs 17.5 lakh crore at the end of FY15 to more than Rs 59 lakh crore now, registering an annual growth rate of approximately 12%.
In FY26 alone, debt issuances mobilised Rs 9.1 lakh crore, nearly twice the amount raised through equity markets during the same period.
But scale alone is not enough, the SEBI Chairman argued. “There is scale in the corporate debt market,” Pandey said, adding that “diversity, liquidity and wider participation are equally important.”
He flagged the extremely low retail participation in corporate bonds as a major concern. According to SEBI’s own investor survey, awareness of corporate bonds as an investment product stands at just 10%, which is lower than even cryptocurrency awareness at 15%. Household penetration of corporate bonds remains below 1%.
“While retail investors have embraced equities and mutual funds, corporate bonds remain unfamiliar to many households,” Pandey said. “We need simpler access, better disclosures, and stronger fixed-income literacy.”
The irony is hard to miss for the crypto community. A financial instrument backed by India’s largest corporations and regulated by SEBI has less name recognition among Indian households than an asset class that the government has taxed at 30% flat and repeatedly warned investors about.
SEBI also reviewing LODR rules for debt-only entities
As part of broader efforts to deepen the corporate bond market, Pandey said SEBI will review whether debt-only listed entities need to comply with the same level of disclosure requirements as equity-listed companies under the Listing Obligations and Disclosure Requirements (LODR) regulations.
“There is a need to review whether debt-only listed entities need the same rigour under LODR regulations as equity-listed companies. We will take up this review in due course,” he said.
The regulator is also exploring a separate regulatory classification for debt brokers, aimed at reducing costs, lowering entry barriers and encouraging specialised intermediaries in the debt market.
Additionally, SEBI is reviewing the municipal debt securities framework to strengthen financing options for urban infrastructure projects, enable pooled financing for multiple civic bodies and encourage greater retail participation.
“The corporate bond market is the economy’s second engine of credit. It reduces over-reliance on banks. A deep bond market can finance infrastructure, productive capacity, urbanization, energy transition, housing, logistics and digital infrastructure,” Pandey said.
Pandey addresses Taiwan overtaking India by market cap
The SEBI Chairman also responded to Taiwan’s stock market overtaking India’s by market capitalisation on Monday. According to Bloomberg, Taiwan’s market cap rose to $4.95 trillion, edging past India’s $4.92 trillion.
“India is a very diversified market. In Taiwan, there are concentrated stocks,” Pandey said. He noted that much of the current global investor interest is concentrated around artificial intelligence and semiconductor-related companies, which has driven valuations in jurisdictions like Taiwan where a few major technology firms dominate the market.
“Some of the most favoured investment themes currently are linked directly or indirectly to AI, and market valuations in certain jurisdictions rise because of exceptional investor interest,” he added.
What this means for Blockchain in India
SEBI’s decision to formally pilot DLT-based tokenisation for corporate bonds is one of the most concrete steps any Indian financial regulator has taken toward integrating blockchain technology into mainstream capital market infrastructure.
It comes at a time when the global tokenisation market is expanding rapidly. According to a CoinGecko report, tokenised real-world assets (RWAs) have surged past $19.3 billion in market capitalisation by Q1 2026, more than tripling since early 2025. In other markets, firms like BlackRock have already filed for tokenised Treasury products with the U.S. SEC.
India, despite having one of the fastest-growing economies and a strong digital infrastructure backbone through UPI and Aadhaar, has been relatively slow on the tokenisation front compared to the U.S., Singapore and the EU.
The Asset Tokenisation (Regulation) Bill, 2026, introduced in Rajya Sabha by AAP MP Raghav Chadha in March this year, remains the only formal legislative attempt so far to bring legal clarity to the tokenised asset ecosystem in India.
SEBI’s pilot, while limited to corporate bonds and still in its early stages, signals that at least one arm of India’s regulatory machinery is willing to move beyond warnings and experiment with blockchain for real financial applications.
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