Tokenisation of corporate bonds using blockchain technology

Securities and Exchange Board of India Chairman Tuhin Kanta Pandey stated that corporate bonds are not risk-free instruments, even as the market regulator prepares major reforms to strengthen India’s debt market and increase investor participation.

Addressing the CareEdge Debt Market Summit in Mumbai, the SEBI chief said the regulator is exploring a pilot project for the tokenisation of corporate bonds using blockchain technology. The initiative aims to improve settlement efficiency, transparency, and accessibility in the bond market.

He highlighted the rapid growth of India’s corporate bond market, noting that outstanding corporate bonds increased from more than ₹17 lakh crore in Financial Year 2015 to over ₹59 lakh crore in Financial Year 2026.

About Tokenisation of corporate bonds

Tokenisation refers to the process of converting an asset or utility into a digital token that can be used on a blockchain platform. These tokens may represent tangible assets such as gold, real estate, and artwork, or intangible assets such as ownership rights, voting rights, and content licensing.

In the context of corporate bonds, tokenisation involves converting traditional debt instruments into digital tokens recorded on a blockchain-based distributed ledger. Each token represents a claim on the debt, while ownership records and transaction histories are stored securely and immutably.The proposed blockchain-based system is expected to provide several advantages, including faster settlement of transactions, reduced operational costs, improved market liquidity, greater transparency, and fractional ownership that can allow smaller investors to participate in the bond market more easily.

Sources: AIR & Others