India’s fintech transformation has already revolutionized how a billion people manage their finances. In less than a decade, Unified Payments Interface (UPI) has replaced smartphones as banks and transformed a once cash-heavy economy into one of the most digital payments ecosystems in the world. But just as the first wave of fintech innovation is settling down, another, quieter but potential revolution is beginning to take shape – one that could not only change the way Indians pay, but also the way they own money.
This next frontier is tokenization: the process of converting real-world financial assets—bank deposits, bonds, property titles, or gold—into secure, programmable digital tokens recorded on distributed ledgers. Tokenization can also make ownership liquid if payments through UPI are instant. The Reserve Bank of India (RBI) recently launched a retail digital currency sandbox to test token deposits and blockchain-based transactions signaling the beginning of India’s next great fintech leap.
For a nation where access, trust and transparency in finance remain unequal, tokenization is more than a technological innovation – it is a philosophical shift, reimagining the flows of power, value and participation in an economy.
Consider today’s typical Indian investor: They might have a bank account, some 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 centralized trust.
Tokenization breaks down these walls. A One million corporate bonds can be divided into 10,000 digital tokens, each representing a fraction of ownership. These tokens can be bought, sold or traded instantly, with each transaction verified on the blockchain ledger under regulated oversight. Settlements will occur in seconds, not days, and verification will shift from paperwork to cryptographic certainty.
This is not an imaginary future. It is an emerging financial reality where every rupee, loan, security, or policy can exist as a verifiable digital token – traceable, programmable, and transferable in real time. If UPI was India’s payments revolution, tokenization could be its ownership revolution.
India’s central bank has taken a measured approach—not to stifle innovation, but to make it comprehensible to legacy institutions. Its experiments with central bank digital currency (CBDC) pilots and tokenized sandboxes provide 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 safety through demonstration.
Yet the real opportunity lies beyond the comfort zone. The distributed ledger could make cross-border transfers nearly instantaneous, a game-changer for millions of migrant workers and small exporters who are still losing money because of middlemen and delays. Tokenization could also transform the remittance economy – reducing costs, increasing speeds, and expanding reach – without relying on heavy oversight.
In this sense regulation is the ramp, not the road. The real engine is the technology that engineers rely on without permission. India’s advantage lies in using blockchain not as an act of compliance, but as an act of trust – proof that a developing economy can grow through innovation, not imitation.
The most transformative potential of tokenization lies not only in faster transactions, but also in unbiased access. In a country where only 9.5% of households invest in securities (stocks, mutual funds), tokenization can redefine financial inclusion by making investment opportunities divisible, affordable and transparent.
Imagine owning one A 500 share of a government bond, or a small piece of commercial property in Bengaluru, or a stake in a renewable energy project in Tamil Nadu – all accessible through digital tokens via a secure wallet on a mobile app. Tokenization breaks large, illiquid assets into fractional units that more ordinary Indians can buy and trade, turning savings into investments and stable capital into dynamic participation. Real-world asset tokenization is increasingly being 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 scenario – such as the RBI’s pilot program for token deposits, instant settlement systems and programmable payments that are automatically triggered through smart contracts.
In this sense, tokenization completes the trinity of digital public infrastructure: if Aadhaar gave every citizen a digital identity, and UPI gave them digital liquidity, tokenization can give them digital ownership – secure, inclusive and auditable. It extends financial empowerment from the act of payment to the act of wealth creation.
Nevertheless, technological revolutions often bring both promise and risk. The same tokenization that can democratize ownership can also create new channels for ambiguity, speculation, and abuse if unchecked. If tokenized assets are mismanaged, they could be used for money laundering or market manipulation – the same risks that were once used to argue for India’s firm stance against private cryptocurrencies.
This is why the regulatory design underpinning India’s token journey is important. By ensuring that tokenized assets remain linked to identifiable, licensed institutions—banks, NBFCs and supervised fintech entities—RBI can maintain transparency without stifling creativity.
Cyber ​​security and data security will be equally important. As assets move across distributed ledgers, ensuring interoperability between blockchain systems and keeping personal data safe from breaches will determine whether tokenization strengthens or weakens financial stability. For India’s diverse economy, the goal should be clear: to build a digital financial ecosystem that is innovative, inclusive and indestructible.
Globally, similar models are taking shape. Singapore’s Project Guardian, the European Central Bank’s digital euro trial, and the UK’s tokenized bond initiative all indicate convergence toward blockchain-integrated finance. But the Indian context is specific. With its huge digital population, strong fintech rails and regulatory maturity, the country can move past legacy systems and pioneer a model that combines technological speed with institutional trust.
At its core, finance is not just a matter of technology; But this is the architecture of belief. It depends on the assurance that savings will be safe, transactions will be transparent and the future will be predictable. Regardless of cryptographic sophistication, tokenization should ultimately strengthen that trust.
By connecting onboarding, verification and real-time transactions into a single digital continuum, the token system 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 rich.
This change is not just about speed or efficiency, as it advances the ideal of equal permission, ensuring that anyone, anywhere, can safely own and transfer property, without privilege or prejudice. Therefore, India’s task is not only technical but also moral: tokenization to serve people, not just make profits. RBI’s Retail Sandbox provides a framework to do this – a regulated pathway where innovation meets accountability, and the invisible code of blockchain co-exists with visible oversight.
India’s fintech journey has never been just about apps or startups; This has been a story of social inclusion. When a vegetable vendor in Patna accepts UPI payments or a weaver in Kannur uses Aadhaar-enabled banking, technology becomes a tool of dignity. Tokenization should extend that legacy – not only by making markets faster but by making finance fairer, putting ownership within reach of those who were once left outside its gates.
Financial change often seems slow until it suddenly seems inevitable. Twenty years ago, few people envisioned biometric IDs enabling welfare delivery to millions of people. Ten years ago, the idea that small merchants would prefer digital payments seemed impossible. Today both are part of daily life.
Tokenization could be the next cool change – one that redefines the way Indians view and participate in money. It will take time, patience and iterative regulation. But if guided by the same vision that has made UPI a global benchmark, India can lead the way in building the world’s first large-scale, regulated tokenized financial system based not on speculation, but on trust.
Because the future of finance isn’t just about faster payments or better contracts. It’s about fairness – the idea that every citizen, regardless of wealth or geography, deserves a stake in the country’s economic story. Tokenization, done right, could embody that ideal: a future where money moves freely, ownership is open, and trust is built into every transaction.
This article is written by Amal Chandra, Coordinator (India) and Vinayakan Sajeev Bina, Coordinator (Italy), SFL.
