The Securities and Exchange Board of India (Sebi) is exploring a pilot project to introduce the use of distributed ledger technology (DLT) for the tokenisation of corporate bonds, Chairperson Tuhin Kanta Pandey said on Tuesday.
Speaking on the sidelines of the CareEdge Debt Market Summit, Pandey said, “Once you do that, there will be a greater possibility of more liquidity and instantaneous autonomous settlements.” He added that the initiative would take time, with various stages likely to unfold over the next six to nine months.
While tokenisation offers several benefits, regulators must also assess the risks associated with the technology, particularly those that could emerge from future developments in quantum computing, he said.
DLT is already being used in areas such as depositories and covenant monitoring. Sebi now wants to evaluate whether the technology can improve efficiency and liquidity in the corporate bond market.
On discussions with the Reserve Bank of India (RBI) regarding corporate bond market reforms, Pandey said the central bank has already issued draft guidelines and is expected to release the final framework shortly.
He added that stock exchanges and Sebi are prepared to proceed once the RBI grants the necessary approvals.
“So far as our exchanges are concerned, and Sebi is concerned, we are quite ready to launch it as soon as the RBI clears it,” he said.
India’s outstanding corporate bond market has expanded to ₹59 lakh crore from about ₹17.5 lakh crore at the end of FY15, representing a compound annual growth rate of 12 per cent. Between FY21 and FY25, average annual fund-raising through the debt market stood at around ₹8 lakh crore. In FY26, debt issuances mobilised about ₹9.1 lakh crore, nearly double the amount raised through equity markets.
India’s corporate financing model remains predominantly bank-led, and a deeper corporate bond market can help reduce dependence on bank credit, Pandey said.
The regulator is also considering whether debt-listed entities should be subject to the same level of compliance under Sebi’s Listing Obligations and Disclosure Requirements (LODR) Regulations as equity-listed companies.
“We will take up this review in due course,” Pandey said.
Sebi and stock exchanges will also undertake issuer-outreach programmes and engage directly with prospective bond issuers. The focus will be on small and medium enterprises (SMEs) and companies that are ready to access the listed debt market but have not yet done so.
Gaps in the corporate debt market
The corporate debt market continues to face four key challenges: concentration by rating and sector, a narrow issuer base, shallow secondary-market liquidity, and low retail participation, Pandey said.
Nearly 90 per cent of outstanding bonds are rated either AAA or AA, while around 70 per cent are issued by financial-sector entities, limiting investor choice. The regulator also noted that the primary debt market continues to be dominated by private placements.
FPI participation
Foreign portfolio investor (FPI) participation in corporate bonds remains a significant gap, Ashishkumar Chauhan, Managing Director and Chief Executive Officer of the National Stock Exchange, said during his address.
“At ₹1.3 lakh crore in FY26, FPI investments represent utilisation of only 15 per cent of the permissible limit, reflecting structural constraints related to operational complexity, tax treatment and hedging availability that require deliberate and coordinated resolution,” he said.
Chauhan added that corporate bonds must play a much larger role in channelising household savings into productive enterprises, providing mid-sized companies access to long-term capital beyond collateral-based lending, and financing infrastructure development and the energy transition.
