E-Paper
India’s next fintech leap
This article is authored by Amal Chandra, coordinator (India) and Vinayakan Sajeev Beena, coordinator (Italy), SFL.
India’s fintech transformation has already revolutionised how a billion people manage their finances. In less than a decade, the Unified Payments Interface (UPI) has transformed smartphones into banks and turned a once-cash-heavy economy into one of the most digitised payment ecosystems in the world. But as the first wave of fintech innovation stabilises, another, quieter yet potential revolution is beginning to take shape—one that could change not just how Indians pay, but how they own.
This next frontier is tokenisation: The process of converting real-world financial assets—bank deposits, bonds, property titles, or gold—into secure, programmable digital tokens recorded on distributed ledgers. If UPI made payments instantaneous, tokenisation could make ownership itself fluid. The Reserve Bank of India’s (RBI) recent launch of a retail digital currency sandbox to test tokenised deposits and blockchain-based transactions signals the beginning of India’s next great fintech leap.
For a nation where access, trust, and transparency in finance remain uneven, tokenisation is more than a technological innovation—it is a philosophical shift, one that reimagines how power, value, and participation flow in an economy.
Consider typical Indian investors today: They may hold a bank account, a few mutual funds, perhaps a fixed deposit or a property. Each asset is managed through layers of intermediaries—brokers, custodians, registrars, and depositories—each adding time, cost, and friction. Ownership is fragmented, often opaque, and dependent on centralised trust.
Tokenisation collapses these walls. A ₹10 lakh corporate bond could be divided into 10,000 digital tokens, each representing a fraction of ownership. These tokens could be bought, sold, or traded instantly, with every transaction verified on a blockchain ledger under regulated oversight. Settlement would occur in seconds, not days, and verification would shift from paper trails to cryptographic certainty.
This is not a futuristic fantasy. It’s an emerging financial reality where every rupee, loan, security, or policy could exist as a verifiable digital token—traceable, programmable, and transferable in real time. If UPI was India’s payment revolution, tokenisation could be its ownership revolution.
India’s central bank has taken a measured approach—not to restrain innovation, but to make it intelligible to legacy institutions. Its experiments with central bank digital currency (CBDC) pilots and tokenised sandboxes offer banks and fintechs a controlled space to build trust in distributed ledger systems. This provides regulatory comfort to traditional players while allowing new entrants to demonstrate efficiency and security through performance.
Yet the real opportunity lies beyond comfort zones. Distributed ledgers can make cross-border transfers nearly instantaneous, a game-changer for millions of migrant workers and small exporters still losing money to intermediaries and delays. Tokenisation could also transform the remittance economy—reducing costs, increasing speed, and expanding access—without relying on heavy-handed oversight.
Regulation, in this sense, is the ramp, not the road. The real engine is technology that engineers trust without requiring permission. India’s advantage lies in harnessing blockchain not as an act of compliance, but as an act of confidence—proof that a developing economy can lead through innovation, not imitation.
The most transformative potential of tokenisation lies not merely in faster transactions, but in fairer access. In a country where only about 9.5 % of households invest in securities (stocks, mutual funds), tokenisation could redefine financial inclusion by making investment opportunities divisible, affordable, and transparent.
Imagine owning a ₹500 fraction of a government bond, or a small piece of a commercial property in Bengaluru, or a stake in a renewable energy project in Tamil Nadu—all through digital tokens accessible via a secure wallet on a mobile app. Tokenisation breaks large, illiquid assets into fractional units that more ordinary Indians can afford and trade, thereby converting savings into investments and static capital into dynamic participation. Real-world asset tokenisation is increasingly discussed in India as a means of enabling fractional ownership and liquidity in assets such as real estate or bonds.
Several blockchain infrastructure ventures are already exploring this landscape—within frameworks such as the RBI’s pilot programmes for tokenised deposits, instant settlement systems, and programmable payments that trigger automatically through smart contracts.
In this sense, tokenisation completes the digital public infrastructure trilogy: if Aadhaar gave every citizen a digital identity, and UPI gave them digital liquidity, tokenisation could give them digital ownership—secure, inclusive, and auditable. It extends financial empowerment from the act of payment to the act of wealth creation.
Yet, technological revolutions often arrive carrying both promise and peril. The same tokenisation that can democratise ownership can also, if unchecked, create new channels for opacity, speculation, and misuse. Tokenised assets, if mismanaged, could be used for money laundering or market manipulation—the very risks that once were used to argue for India’s firm stance against private cryptocurrencies.
This is why the regulatory design underpinning India’s tokenisation journey is crucial. By ensuring that tokenised assets remain tied to identifiable, licensed institutions—banks, NBFCs, and fintech entities subject to oversight—the RBI can preserve transparency without stifling creativity.
Cybersecurity and data protection will be equally vital. As assets move onto distributed ledgers, ensuring interoperability among blockchain systems and safeguarding personal data from breaches will determine whether tokenisation strengthens or weakens financial stability. For India’s diverse economy, the goal must be clear: To build a digital financial ecosystem that is innovative, inclusive, and incorruptible.
Globally, similar models are taking shape. Singapore’s Project Guardian, the European Central Bank’s digital euro trials, and the UK’s tokenised bond initiatives all signal convergence toward blockchain-integrated finance. But India’s context is distinctive. With its vast digital population, robust fintech rails, and regulatory maturity, the country can leapfrog legacy systems and pioneer a model that marries technological speed with institutional trust.
At its core, finance is not just a matter of technology; but it is an architecture of trust. It depends on the assurance that savings remain secure, transactions are transparent, and the future is predictable. Tokenisation, despite its cryptographic sophistication, must ultimately reinforce that trust.
By linking onboarding, verification, and real-time transactions into a single digital continuum, tokenised systems can build on the achievements of India’s digital revolution. When these services are delivered through mobile-first platforms in regional languages, they open investment channels to rural and small-town citizens who have long been excluded from high-value markets dominated by institutions and the wealthy.
This transformation is not only about speed or efficiency, as it advances the ideal of equal permission, ensuring that anyone, anywhere, can own and transfer assets securely, without privilege or prejudice. India’s task, therefore, is as moral as it is technical: to make tokenisation serve people, not merely profits. The RBI’s retail sandbox offers a framework for doing so—a regulated pathway where innovation meets accountability, and blockchain’s invisible code coexists with the visible oversight.
India’s fintech journey has never been just about apps or startups; it has been a story of social inclusion. When a vegetable seller in Patna accepts UPI payments or a weaver in Kannur uses Aadhaar-enabled banking, technology becomes a tool of dignity. Tokenisation must extend that legacy—not only by making markets faster but by making finance fairer, placing ownership within reach of those who were once left outside its gates.
Financial change often feels slow until it suddenly feels inevitable. Twenty years ago, few imagined biometric IDs enabling welfare delivery for millions. Ten years ago, the idea that small traders would prefer digital payments seemed improbable. Today, both are part of daily life.
Tokenisation may be the next quiet transformation—one that redefines how Indians perceive and participate in wealth. It will take time, patience, and iterative regulation. But if guided by the same vision that made UPI a global benchmark, India can lead the world in building the first large-scale, regulated tokenised financial system, anchored not in speculation, but in trust.
Because the future of finance is not just about faster payments or smarter contracts. It is about fairness—the idea that every citizen, regardless of wealth or geography, deserves a stake in the nation’s economic story. Tokenisation, done right, could make that ideal tangible: A future where money moves freely, ownership is open, and trust is built into every transaction.
This article is authored by Amal Chandra, coordinator (India) and Vinayakan Sajeev Beena, coordinator (Italy), SFL.
