SEBI Pilot Introduces Tokenised Corporate Bonds
The Securities and Exchange Board of India is launching a pilot program to digitize corporate bond ownership without changing investment risks.
SEBI is initiating a pilot program to tokenize corporate bonds. The initiative aims to streamline the buying, holding, and settling of these securities. It does not create a new asset class. It changes only the recording method for ownership.
Investors do not need to open new accounts. The system operates as an extension of existing demat accounts. KYC details remain unchanged. The technology works behind the scenes.
Tokenization Preserves Bond Terms
A tokenized bond retains its original financial structure. Coupon rates and maturity dates stay the same. Credit ratings and issuer identities are unchanged. Investor rights remain identical to traditional bonds.
The only difference is the storage medium. Ownership is recorded on a private digital network. It is no longer held in a standard database. This change does not alter credit risk. Tokenization does not guarantee repayment.
Settlement Uses Digital Rupee
The pilot uses the RBI’s digital rupee for settlement. Participants require a CBDC wallet at their bank. This enables simultaneous transfer of bonds and funds. It reduces the risk of failed settlements.
Coupon payments may be automated. Key data like payment dates are embedded in the token. This reduces manual processing errors. The system aims to increase market efficiency.
Retail Access Remains Limited
Retail investors are excluded from the first phase. SEBI plans to expand access later. Secondary-market trading is not yet enabled. Direct transfers between demat accounts may be possible. Selling remains less convenient than in open markets.
According to GN auto markets/bonds: corporate bonds, the core investment logic is unchanged. Investors must still assess creditworthiness. Interest rate sensitivity remains a key factor. The technology improves speed, not safety.
