Credit where credit's due: India's tokenised bonds must now open the door to global capital

Singapore: On Sept 7, REC raised Rs 500 cr through India’s first pilot issue of tokenised corporate bonds under Sebi’s regulatory sandbox. Ownership sat on a permissioned distributed ledger, settlement was in wholesale CBDC, and pay-in, allotment and listing finished the same day.

The book drew Rs 796 cr against a Rs 100 cr base issue, with Rs 500 cr accepted. Two days later, L&T raised Rs 500 cr for 3 yrs, becoming the first private issuer to follow, while IIFL Finance raised Rs 25 cr at 9.1%, the first non-PSU.

Also Read: Oh, Let’s Look Beyond AAA: A new market-making framework could make lower-rated corporate bonds more investible


Rs 1,025 cr in a week, against a corporate bond market of roughly Rs 59 lakh cr that privately placed Rs 2.65 lakh cr across 603 issues between April and July. As a share of the market, it may be nothing, but as an engineering result, it’s not nothing.

Atomic settlement, where security and money change hands in one transaction rather than a day apart, removes a class of settlement risk the market has carried for decades, and it was done inside the existing regulatory perimeter with statutory protections intact.

What it settles is that domestic plumbing can be upgraded without breaking anything. What it leaves open is harder. These were deliberately closed loops: Indian issuers, institutional investors, digital rupee and a domestic ledger. The notes have a 3-mth lock-in, with exchanges expected to build a trading venue by December. So far, no one outside the original buyers has bought or sold them.

Also Read: Behind the Modi-Xi border thaw, India's dependence on Chinese imports, especially rare earths, keeps deepening

Holdings cannot presently move between conventional demat accounts and Demat 2.0 ledger either, a second closed loop inside the first.

Every party could reach every other before tokenisation, and issues would have completed without it, only more slowly. What improved was issuance efficiency. What was not tested was access.

Access is what tokenisation is good at. MFs, ETFs and e-brokerage didn’t invent new assets. They changed who could own existing ones.

Tokenisation extends that logic across borders, and then into workflow. A tokenised bond shouldn’t be a demat security with a new label.

On compliant programmable rails, it can be pledged, financed, used in treasury workflows, or moved into collateral arrangements without each participant rebuilding the same operating stack.

Tokenised US treasury funds stand at roughly $16 bn, inside a non-stablecoin tokenised asset market in the mid-$30 bn range. That growth is not a fashion. The buyer was capital already living onchain, holding dollars that earned nothing, while someone else kept the bill yield. It could have wired out and bought bills, but only by leaving the rail its business runs on. Tokenisation removed that choice, and the money arrived.

Tokenised credit is now roughly $8 bn, but it too is concentrated in US dollar assets. Emerging-market corporate credit onchain remains a rounding error.

So, concentration is not really about asset class but about economy.

Whether the label says ‘treasury’ or ‘credit’, the cash flow is mostly dollar-denominated, and US, exposed to one currency, one central bank and one credit cycle. Ten such instruments are not a portfolio.

India is where the gap is clearest. Foreign capital does reach Indian credit. EY recorded $3.5 bn of private credit investment in H1 2026, with global funds at 26% of deal value, down from 68% a year earlier. But look at the channel carrying it. A global fund stands up an offshore vehicle, takes a registration, appoints a custodian and a designated bank, and writes large tickets. Each step costs roughly the same.

The real minimum is not the instrument’s face value but the operating stack around it, which prices out everyone below institutional scale. Family offices, smaller institutions, wealth platforms and onchain treasuries may want the exposure; the access cost keeps them out.

The swing is the evidence. A channel carrying 68% of a market one year, and 26% the next, isn’t a market so much as a small number of large decisions. Demand is not in doubt. Indian credit carries real credit and liquidity risk, and a dollar investor must also hedge the rupee, which is expensive. What survives is a return attached to a credit cycle global portfolios don’t already own.

Which brings the question back to the digital rupee. Settling a domestic bond in wholesale CBDC among domestic institutions improves domestic market infrastructure. The switch that matters more lets tokenised Indian assets be held by foreign capital, including the $300 bn pool of stablecoin liquidity with no regulated pathway into Indian markets today, and keeps law and regulatory protection fully intact.

For India, the measure is direction. A global allocator in Singapore, Dubai or NYC should be able to hold Indian credit alongside US gov debt, each asset governed by laws of its home market. Over time, that Indian credit should also be usable in ordinary capital-markets workflows: collateral, financing, treasury management and portfolio construction. That would bring in investors who cannot reach Indian markets today.

Rs 1,025 cr settled in digital rupee is a good beginning. The larger prize is a dollar in Dubai that can lend to an Indian company, and stay under Indian law while it does.

(The writer is founder-chief architect, aarna.ai)