Tokens for the Many: Why Nilekani's Pilots Matter

In lakhs of Indian villages, the most valuable asset a household owns is tied up in the cattle shed rather than held in a bank locker, and yet lenders rarely accept a cow as security because they cannot verify the animal, establish its owner or monitor its health, a gap that practitioners at Dvara E-Registry describe as one of the oldest blind spots in rural finance. It was therefore significant that on 10 September 2026, at the Global Fintech Fest in Mumbai, Nandan Nilekani presented three live pilots that convert a dairy cow, a warehouse receipt for stored grain and a pool of loans into digital tokens, all built on a common architecture known as the Finternet.

The announcement also carries clear policy weight. It came on the same day that the Reserve Bank of India and the Securities and Exchange Board of India launched Demat 2.0, their tokenised corporate bond pilot, and on 3 October RBI Governor Sanjay Malhotra reaffirmed that the central bank remains cautious about private cryptocurrencies while actively supporting tokenisation and distributed ledger technology. India has, in effect, chosen to tokenise the real economy under regulatory supervision rather than accommodate speculative digital coins.

The pilots deserve firm support, because they address the most persistent weakness in Indian lending, namely that small borrowers own real assets which lenders are unable to trust or accept as collateral. Their eventual value, however, will rest on three conditions that Nilekani himself identified: the underlying rails must remain open and interoperable, each token must remain faithful to the physical asset it represents, and the resulting liquidity must reach small farmers and enterprises rather than remain confined to large institutions. Why the direction is sound becomes clear from the kind of assets being tokenised, and that foundation in turn shows what each condition will demand of regulators and builders.

The first ground for confidence is that the pilots tokenise rights which Indian law already recognises. The electronic negotiable warehouse receipts placed on a ledger in the Arya.ag pilot are governed by the Warehousing (Development and Regulation) Act, 2007, are issued only by accredited warehouses and are already accepted as security for crop loans, while the third pilot, which standardises loan documents across marketplaces through smart contracts, works on loans that are already originated by regulated lenders. A token built on a legally enforceable right improves an established instrument rather than creating an untested one, which is precisely the form of innovation that a cautious central bank can accommodate.

This legal footing matters all the more because the credit gap these pilots target is substantial. When the Union Government launched a ₹1,000 crore credit guarantee scheme for loans against e-NWRs in December 2024, lending against such receipts stood at roughly ₹4,000 crore, against an estimated potential of ₹5.5 lakh crore. A principal cause is that the records of what is stored, whether it has already been pledged and what remains owed are held in separate systems, which makes verification slow and costly for lenders. The Finternet model addresses this through a composite token that combines farmer, commodity, warehouse and insurance data so that a bank can assess risk in a single view, and the dairy pilot applies the same logic to a cow's identity, ownership, health and milk yield.

What turns these separate fixes into a single system is that all three pilots share one architecture, designed, as Nilekani put it, to be usable across multiple asset types. This follows the lesson of Aadhaar and UPI, builds on the 2024 Bank for International Settlements working paper that Nilekani co-authored with Agustín Carstens, and responds directly to the barrier that the International Organization of Securities Commissions identified in its 2025 report, namely the lack of interoperability between blockchains.

Interoperability, however, is only the means, and liquidity is the end. Nilekani argued that tokenised assets become useful at scale only when they can move freely between many lenders and buyers, and suggested that AI agents could create that demand by acting for small businesses, for instance by converting an invoice into a token and matching it with willing lenders. The securitisation pilot is an early step in this direction, since loans written in a common, machine-readable format can be pooled and sold far more easily than loans that each follow their own template.

Turning this promise into practice now depends on the three conditions identified at the outset. To keep the rails open, the RBI, SEBI and the Warehousing Development and Regulatory Authority should jointly issue common standards for how asset tokens are formatted, verified and transferred between ledgers, and dedicated networks such as Arya.ag's should be given a firm timeline to connect to shared, permissioned rails open to any bank or warehouse operator. To keep tokens faithful to the underlying asset, warehouse samplers and the veterinarians who tag cattle should be accredited and held legally liable for false entries, personal data should be shared only with consent under the Digital Personal Data Protection Act, and every pilot should publish its loan volumes, interest rates, default rates and approval times. A mandatory, regulator-backed registry for these tokens would give such records the legal force and market confidence that lenders require.

To carry liquidity to the many, success should be measured by the cost and speed of credit for a smallholder rather than by global forecasts of trillions of dollars in tokenised assets, and the e-NWR credit guarantee should be extended explicitly to tokenised receipts, with a comparable NABARD-backed guarantee for cattle tokens. Governor Malhotra observed at the Global Fintech Fest that a financial system which moves quickly but does not command trust will attract few users. If India keeps its rails open, its tokens honest and its attention on the small borrower, the most valuable asset in the village will at last carry weight at the bank.

Sources:

1. Carstens, Agustín, and Nandan Nilekani. Finternet: The Financial System for the Future. BIS Working Papers No. 1178. Basel: Bank for International Settlements, April 2024. https://www.bis.org/publ/work1178.pdf.

2. B3. "CPR." News release, February 19, 2026. https://www.b3.com.br/pt_br/noticias/cpr.htm.

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4. Cointelegraph. "Arya.ag Tests Tokenized Grain Receipts on Avalanche." Cointelegraph, September 2026. https://cointelegraph.com/news/arya-ag-tests-tokenized-grain-receipts-avalanche.

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7. Entrepreneur India. "5 Things to Know from Nandan Nilekani's Talk at Global Fintech Fest 2026." Entrepreneur India, September 2026. https://india.entrepreneur.com/business-news/5-things-to-know-from-nandan-nilekanis-talk-at-global-fintech-fest-2026.

8. Reuters. "Global Securities Watchdog Says Tokenization Creates New Risks." Kitco News, November 11, 2025. https://www.kitco.com/news/off-the-wire/2025-11-11/global-securities-watchdog-says-tokenization-creates-new-risks.

9. Tribune. "RBI, SEBI Launch India's First Tokenised Corporate Bond Pilot." The Tribune, September 10, 2026. https://www.tribuneindia.com/news/business/rbi-sebi-launch-indias-first-tokenised-corporate-bond-pilot.