From UPI to tokenised assets: Is India building the next generation of financial infrastructure?

What are tokenised assets, and how do they differ from ordinary digital records of ownership?

Tokenised assets are digital representations of assets or financial claims created on programmable infrastructure. The important difference is that tokenisation can reshape how ownership, transfers, settlement and compliance work. An ordinary digital record usually documents an asset within existing legal and operational systems. A tokenised asset aims to make the asset and its related rights and obligations digitally native, or “on-chain.”

For example, a corporate bond could be issued, transferred and settled as a token. Its ownership record could be updated through shared digital infrastructure, while programmed rules could support compliance or parts of the asset’s lifecycle. The token is therefore more than a database entry; its design may connect ownership with transfer and settlement processes.

India is testing this approach in regulated finance. The RBI is exploring tokenised money and wholesale CBDC applications, while SEBI launched a Demat 2.0 pilot for tokenised corporate bonds on September 10, 2026. Legal clarity remains essential because technology alone does not define ownership rights.

What steps is India taking to develop tokenised financial infrastructure, including the e-rupee, wholesale CBDC, Unified Markets Interface and Demat 2.0 pilot?

India’s development path begins with tokenised forms of money. The Reserve Bank has been exploring the e-rupee and wholesale applications of central bank digital currency. These efforts examine how money itself could move on digital infrastructure and support financial-market activity.

The RBI has also conceptualised a Unified Markets Interface. It is intended as next-generation financial-market infrastructure, with the capability to tokenise financial assets and settlements using wholesale CBDC. In the securities market, SEBI announced the successful launch of its Demat 2.0 pilot for tokenised corporate bonds on September 10, 2026. That pilot brings tokenisation into a regulated market structure.

These steps show a progression from experimentation toward practical testing. They do not yet prove that tokenised markets will scale. Success will depend on legal certainty, shared standards, institutional trust, cybersecurity and connections among market participants. The RBI has nevertheless highlighted tokenisation’s potential to improve market efficiency.

How large is the digital-payment foundation India is building on, and what does UPI's scale reveal about interoperable infrastructure?

India’s tokenised-finance ambitions rest on an unusually large digital-payment foundation. In August 2026 alone, UPI processed more than 24.5 billion transactions worth nearly Rs 29.8 lakh crore, according to NPCI. That volume shows how deeply interoperable digital payments have entered everyday finance.

UPI’s key achievement was not simply instant payment. It created a common rail that banks, fintech companies and other participants could use. Because these institutions connected through shared infrastructure, they could build services on top of the same network instead of operating isolated systems. Interoperability helped create broad usefulness and network effects.

This offers a model for tokenised assets, but the challenge is wider. Asset markets involve wallets, custodians, registries, exchanges and settlement systems. They may also cross national borders. India’s UPI experience suggests that common standards can unlock innovation, while tokenised markets will require interoperability across many more institutions and jurisdictions.

What could tokenisation change in the trading and settlement of bonds, real estate, receivables and other real-world assets?

Tokenisation could change how real-world assets are issued, transferred and settled. Instead of treating ownership, compliance and settlement as separate manual processes, programmable infrastructure could connect them. This may reduce friction, support faster transfers and automate selected lifecycle events. It could also make ownership more granular.

For bonds, tokenisation might link a digital ownership record to defined cash flows and maturity. For real estate, a properly structured token could represent a fractional economic interest in an underlying property. Similar structures could apply to infrastructure, trade receivables or other productive assets. The token would represent a claim, not necessarily direct ownership of every underlying asset.

The article stresses an important limit: technology does not create liquidity by itself. A token needs clear legal rights, trusted records, market participants and buyers and sellers willing to transact. Without those conditions, tokenisation may remain a collection of pilots rather than meaningful financial infrastructure.

Why are bonds considered a particularly suitable asset for tokenisation?

Bonds fit tokenisation particularly well because their core features are relatively structured. They have defined cash flows, stated maturity dates and identifiable ownership records. Those predictable elements can be represented digitally and linked to programmed processes. That makes bonds a practical setting for testing tokenised issuance and settlement.

A tokenised corporate bond could carry a digital ownership record and move through regulated infrastructure. Rules might support parts of the bond’s lifecycle, such as recording transfers or coordinating settlement with payment. Tokenisation could also enable more granular ownership and potentially improve liquidity by reducing friction between issuance, transfer and settlement.

India has begun testing this idea rather than leaving it theoretical. SEBI announced the successful launch of its “Demat 2.0” pilot for tokenised corporate bonds on September 10, 2026. The pilot is significant because it places tokenisation inside a regulated securities-market structure, although wider success still requires legal clarity, interoperability and institutional trust.

What legal rights would a token represent, and who would decide whether that ownership is valid during a default, insolvency or dispute?

A token should represent clearly defined rights, not merely a digital balance. Those rights might concern ownership, repayment, income, transfer or a fractional economic interest in an underlying asset. Investors must know what the token represents, which obligations attach to it and who maintains the definitive ownership record.

The article highlights difficult cases such as default, insolvency and disputes. A tokenised property interest, for example, would need a legally recognised connection to the underlying economic claim. The system would also need to specify what happens when an issuer fails or when different records conflict. A blockchain can record transactions, but it cannot by itself create enforceable rights.

Legal and regulatory frameworks must establish the meaning of ownership. Courts would apply those rules when ownership is challenged, while regulators and lawmakers define the surrounding framework. Until that clarity exists, investors cannot be certain that token ownership will be upheld in court.

Why must tokenised-asset systems be interoperable across wallets, custodians, exchanges, registries, settlement systems and countries to become useful markets?

Tokenised assets become useful only when buyers and sellers can interact across systems. A closed network may record ownership efficiently, but it cannot create broad market access by itself. Interoperability allows different institutions and infrastructures to recognise, transfer and settle the same asset under compatible rules.

The required connections extend beyond payments. Wallets, custodians, registries, exchanges, settlement systems and regulated financial institutions must work together. For example, a token bought on one platform should be recognised by the relevant custodian and settlement system without forcing participants into isolated networks. Cross-border markets add another layer because transactions may involve different countries and regulatory environments.

UPI demonstrates the value of common rails: banks and fintechs could connect to one interoperable network and build services on top. Tokenised assets need an even broader approach because they are globally traded. Without interoperability and network effects, tokenisation may produce disconnected pilots instead of efficient markets.

Key Facts:

📌 Tokenisation can make assets and their rights digitally native.

📌 Tokens may represent bonds, fund units, receivables or property interests.

📌 Technology alone does not establish what ownership legally means.

📌 The RBI is exploring the e-rupee and wholesale CBDC applications.

📌 The Unified Markets Interface could tokenise assets and settlements.

📌 SEBI launched a Demat 2.0 tokenised-bond pilot in September 2026.

📌 UPI processed over 24.5 billion transactions in August 2026.