MUMBAI: The Securities and Exchange Board of India (Sebi) is exploring a pilot to tokenize corporate bonds as the regulator seeks to deepen India’s debt markets, chairman Tuhin Kanta Pandey said on Tuesday.
“We are exploring a pilot for tokenization of corporate bonds,” Pandy said at the Care Edge Debt Market Summit 2026 in Mumbai. “The pilot will test whether tokenization can deliver faster settlement, better traceability, automated servicing and greater transparency. Once you do that, there will be a greater possibility of more liquidity.”
Tokenization refers to the conversion of real-world financial assets into digital tokens recorded on distributed ledger technology (DLT) systems such as blockchain networks, which allow multiple participants to record and synchronize data without a central authority.
Sebi, Pandy said, would proceed cautiously, citing technological and operational risks. “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.”
The technology currently has limited use in India’s debt market infrastructure. 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, along with the Reserve Bank of India and the finance ministry, is also working on a market-making framework for the corporate bond market. Finance Minister Nirmala Sitharaman had announced the proposal in the Union Budget 2026 as part of efforts to deepen bond markets and improve retail participation.
The regulator may also review disclosure norms for companies that have only debt listed on exchanges, Pandey said.
“There is also a need to review whether debt-only listed entities need the same rigor under LODR (Listing Obligations and Disclosure Requirements) regulations as equity listed companies. We will take up this review in due course,” the Sebi chief said.
Separately, Sebi is planning a distinct category of brokers for bond markets. Pandey said a dedicated regulatory classification for debt brokers could lower costs, reduce entry barriers and encourage specialized intermediaries.
