India’s markets regulator Sebi is initiating a pilot project to explore how blockchain-based tokenisation of corporate bonds can facilitate faster trading, reduce costs, and support a more robust repo market, aiming to combat persistent illiquidity and fragmentation issues.
India’s markets regulator is preparing a pilot to test whether tokenising corporate bonds can make trading and settlement faster, cleaner and easier to scale, while also examining whether the same technology could support a deeper repo market in the debt segment. At a briefing on Thursday, Sebi whole-time member Amarjeet Singh said the exercise will be carried out with the Reserve Bank of India and will look at whether a shared ledger can allow securities and cash to move at the same time, cutting reconciliation work and related costs.
The regulator is also studying whether smart contracts could automate coupon payments and other routine servicing events. Singh said the aim is not to create a parallel market for tokenised debt, but to see whether distributed ledger technology can improve the existing corporate bond market without changing its basic structure. Business Standard reported earlier this year that Sebi Chairman Tuhin Kanta Pandey had indicated the pilot could be ready within six to nine months.
The effort comes as Sebi seeks to address chronic illiquidity in the corporate bond market. Singh said that of nearly 33,000 outstanding instruments, only 400 to 500 typically trade on any given day. He also pointed out that the market remains highly fragmented, with those securities spread across about 7,200 issuers. Sebi is therefore looking at ways to push more issuances into fewer benchmark International Securities Identification Numbers, alongside issuer buybacks, liquidity-support mechanisms and a stronger request-for-quote platform.
A parallel priority is the corporate bond repo market, which Singh said accounts for less than 1% of the overall repo market and sees roughly ₹6,000 crore in daily volumes. Sebi is examining measures to deepen that segment alongside securities lending and borrowing, as well as a more careful framework for short selling. Some of those steps would require coordination beyond Sebi’s direct authority, he said, underlining the need to work with other regulators and government bodies.
The broader backdrop is the rapid expansion of India’s corporate debt market. Outstanding corporate bonds have risen from about ₹17.5 trillion at the end of FY15 to more than ₹60 trillion at the end of July 2026, according to Sebi’s figures, even as trading remains concentrated in a relatively small slice of available paper. The regulator is also developing a formal market-making framework proposed in the Union Budget for 2026-27, reflecting a push to make the market more usable for investors and issuers alike.
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