India's tokenisation framework separates regulated financial assets from speculative crypto markets.
MUMBAI: The Reserve Bank of India’s FinTech Department hosts a focused edition of its monthly Finquiry consultation on July 31 dedicated entirely to the tokenisation of financial assets. Held at RBI’s Central Office in Mumbai the session brings together banks fintechs and market infrastructure players to discuss one of the most consequential shifts underway in India’s capital markets architecture.
This session builds on institutional momentum. Since establishing its dedicated FinTech Department in 2022 RBI has steadily progressed from early digital currency experiments toward a full tokenisation framework built around the Unified Markets Interface unveiled last October at the Global Fintech Fest.
A Thoughtful Two-Pronged Framework
What stands out about India’s approach is its clarity of purpose. Rather than blending regulated financial instruments with speculative crypto assets as some jurisdictions have done India has drawn a firm and sensible line. Tokenisation here refers strictly to digital representations of legally recognised claims such as corporate debt certificates of deposit and mutual fund units all governed by existing securities law. This sits alongside wholesale central bank digital currency which serves purely as the settlement layer.
Under UMI these two elements combine to enable what is called atomic settlement where a tokenised asset and its corresponding digital currency payment exchange simultaneously eliminating the risk of one party defaulting mid-transaction. This is a meaningfully safer model than legacy settlement systems and reflects considered design rather than a rushed rollout.
Real Pilots Already Underway
Encouragingly this is not merely theoretical policy discussion. RBI has already launched a live pilot tokenising certificates of deposit through UMI since October last year giving regulators and market participants operational data to work with. SEBI followed in May this year announcing its own pilot for tokenising corporate bonds using distributed ledger technology with a six to nine month execution timeline. Having two regulators actively test complementary pilots simultaneously suggests coordinated rather than siloed policymaking.
RBI has also confirmed plans to launch a dedicated CBDC and Asset Tokenisation Sandbox during the current fiscal year alongside expanded cross-border pilots including Project Rialto and Project Mandala giving the ecosystem a structured testing ground before any wider rollout.
Learning From the Best Global Models
India’s approach draws thoughtfully from leading international precedents while adapting them to domestic needs. The framework echoes Singapore’s Project Guardian in its institutional focus on debt instruments formalised through an RBI-MAS bilateral agreement while routing settlement through central-bank-operated infrastructure for added stability. It also mirrors Hong Kong’s Project Ensemble in using tokenised central bank money as the foundational settlement asset. This kind of deliberate cross-pollination of global best practices positions India’s framework to avoid pitfalls other markets have already encountered.
Addressing the Right Questions Early
What makes this Finquiry session particularly valuable is the substance of what regulators are examining. RBI is reportedly probing important operational questions including how atomic settlement’s need for real-time liquidity might affect bank cash management and how token ownership will hold up legally during insolvency proceedings under India’s Insolvency and Bankruptcy Code. Regulators are even looking ahead to post-quantum cryptography standards to ensure long-dated instruments like thirty-year government bonds remain secure decades into the future.
This kind of forward-looking rigorous questioning at the consultation stage is exactly what gives complex financial infrastructure the strongest foundation before wider deployment.
Real Economic Benefits on the Horizon
The potential upside for India’s broader economy is substantial. Tokenising trade receivables and invoices could meaningfully ease credit access for MSMEs by turning previously illiquid paperwork into fractionalised tradeable digital assets opening funding channels beyond traditional bank lending. Similarly fractionalising high-value corporate debt into smaller units could responsibly widen access to fixed income investments for retail investors who have historically been priced out of such instruments.
A Measured Path Forward
Importantly this consultative process reflects careful groundwork rather than rushed implementation. Sandbox pilots and closed-door technical discussions like this Finquiry session allow regulators to stress test legal and operational questions well before any large-scale commercial rollout. With active collaboration between RBI, SEBI and IFSCA already underway alongside strong lessons drawn from Singapore Hong Kong and the UK’s own tokenisation experiments India is building its digital asset infrastructure on a genuinely solid and well-considered foundation.
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