IIFL Finance has completed a ₹25 crore tokenised bond transaction on the Metropolitan Stock Exchange of India, becoming the first non-PSU NBFC in India to execute a deal of this type, according to the company. The transaction was conducted under SEBI’s Regulatory Sandbox framework and comes as India expands its use of distributed ledger technology and digital-rupee settlement for corporate debt markets.
India’s corporate bond market is beginning to test whether distributed ledger technology can move beyond experimentation and become part of regulated securities infrastructure. IIFL Finance has now joined that effort with a ₹25 crore tokenised bond transaction, executed through the Metropolitan Stock Exchange of India (MSEI).
According to IIFL Finance, the transaction makes it the first non-PSU non-banking financial company (NBFC) in India to undertake a tokenised bond transaction. Trust Investment Advisors Private Limited served as the sole arranger and advisor, while the bonds will be listed on the National Stock Exchange of India (NSE). The transaction was carried out under the Securities and Exchange Board of India’s Regulatory Sandbox framework.
The significance of the deal extends beyond the size of the issuance. It places a private-sector financial institution inside an emerging market infrastructure experiment in which conventional corporate bonds are represented digitally using distributed ledger technology (DLT).
Tokenisation changes how ownership and servicing information is recorded rather than creating an entirely new type of bond. Under SEBI’s Demat 2.0 pilot, the underlying corporate bond retains its existing legal characteristics, investor rights, credit-rating requirements, disclosure obligations and listing framework. The technology layer changes, while the regulated nature of the security remains intact.
That distinction is important for the development of India’s digital asset infrastructure. Rather than establishing an unregulated parallel market, the pilot is designed to introduce DLT into existing securities-market structures.
The broader initiative was launched by the Reserve Bank of India (RBI) and SEBI at the Global Fintech Fest 2026 in Mumbai. The pilot combines tokenised corporate bonds with the RBI’s wholesale central bank digital currency, or digital rupee, for settlement. The approach is designed to allow the securities and payment legs of a transaction to settle simultaneously, reducing settlement risk and the need for sequential processing.
The first phase has already demonstrated that the model can support issuances from different types of companies. SEBI’s published information shows that REC Limited issued ₹500 crore, Larsen & Toubro issued ₹500 crore, and IIFL Finance issued ₹25 crore, bringing the first-phase total to ₹1,025 crore. IIFL’s transaction was the third issuance in the pilot.
For financial institutions, the potential advantage of tokenisation is not simply putting a bond on a blockchain. The larger proposition involves connecting issuance, ownership records, settlement and asset servicing through more integrated digital infrastructure.
DLT can provide a shared electronic record of transactions, while smart-contract-based processes can potentially automate selected lifecycle events. When combined with a digital settlement asset such as the RBI’s wholesale CBDC, the architecture could reduce the time between securities transfer and payment.
SEBI Chairman Tuhin Kanta Pandey has described the pilot as a technology change applied to existing corporate bonds rather than the creation of a new asset class. SEBI has also indicated that subsequent phases will expand the experiment to secondary trading through existing request-for-quote platforms, with potential retail access to be considered later.
That next stage could prove more consequential than the initial issuance activity. Primary-market pilots demonstrate that tokenised securities can be created and settled within a controlled environment. Secondary-market activity will test whether the technology can support liquidity, price discovery and trading without fragmenting existing bond markets.
The pilot also addresses a key issue in digital asset adoption: maintaining established investor protections while changing the underlying technology. SEBI says tokenised bonds remain subject to existing requirements around credit ratings, debenture trustees, listing and disclosures, while investors’ rights and the issuer’s obligation to repay remain unchanged.
For India’s fintech ecosystem, digital asset infrastructure and banking technology, the development illustrates a broader shift toward regulated tokenisation rather than cryptocurrency-led experimentation. The focus is increasingly on using DLT to modernise assets that already operate within established financial-market rules.
The approach also fits into India’s wider push toward interoperable digital financial infrastructure. The country’s digital-rupee programme provides a potential settlement layer, while exchanges, depositories, banks and regulators can provide the institutional infrastructure around tokenised securities.
For NBFCs, the technology could eventually affect how companies access debt capital markets, manage securities issuance and interact with investors and intermediaries. However, the current pilot remains an early-stage test. Questions around secondary-market liquidity, interoperability, scalability, governance, cybersecurity and integration with existing market infrastructure will need to be addressed before tokenised bonds become a mainstream issuance channel.
IIFL Finance’s transaction therefore matters less as a standalone ₹25 crore bond and more as another data point in India’s effort to modernise digital debt-market infrastructure. With three issuers already participating in the first phase, the next test will be whether tokenisation can move from controlled issuance experiments toward broader trading and market participation.
Market Landscape
India’s corporate bond tokenisation initiative is developing alongside a wider global shift toward tokenised financial assets, DLT-based settlement and programmable financial infrastructure.
The immediate Indian framework is notable because it does not seek to replace the existing bond market. SEBI’s Demat 2.0 model retains conventional investor protections and market requirements while changing the technology used to record ownership and service securities.
The first phase has produced ₹1,025 crore across three issuers, while SEBI says subsequent phases are expected to explore secondary trading and eventual retail access.
This creates potential opportunities across Digital Payments Platforms, Blockchain Financial Technology, Open Banking Infrastructure, Embedded Finance Infrastructure and Banking Technology Innovation. The eventual competitive question will be whether tokenised infrastructure can deliver measurable improvements in settlement efficiency, liquidity and operating costs without creating new fragmentation.
Top Insights
- IIFL Finance’s ₹25 crore transaction makes it the first non-PSU NBFC in India to execute a tokenised bond deal, according to the company.
- SEBI’s Demat 2.0 pilot has reached ₹1,025 crore across three issuers, providing an early test of DLT-based corporate bond infrastructure.
- The pilot connects tokenised securities with RBI’s wholesale CBDC, enabling simultaneous movement of the securities and payment legs.
- Existing investor protections remain in place, distinguishing India’s regulated tokenisation model from cryptocurrency-based financial-market experiments.
- Secondary trading will be a key next-stage test for liquidity, interoperability and the scalability of tokenised corporate bonds.
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