Real-world asset tokenisation is the issuing of a bond, a fund unit or a loan as a token on a blockchain, so that it can be traded and settled in minutes instead of days. It is also called RWA tokenisation. The token is a digital record that says who owns the asset. It does not replace the asset. It replaces the old way of recording who owns it.
Here is the old way. A bond's owners are written in a registry, the official record of who owns which bond. In India, that registry is kept by a depository. When a bond is sold, the buyer's money and the seller's bond move through several institutions, including a clearing and settlement system. This usually takes a day or more. Each institution keeps its own records, and they must be matched at the end.
With tokenisation, the bond is created as a token on a blockchain. The blockchain is the registry. When the bond is sold, the token and the payment can move in the same step. This is called atomic settlement: either both move, or neither does. Settlement can happen within minutes, and on any day of the week.
For instance, a company issues bonds worth ₹100 crore, in units of ₹10,000 each, on a tokenisation platform. An investor buys 50 units, worth ₹5 lakh. The platform records the 50 tokens in the investor's wallet. Every three months, the platform's program pays each token holder the interest automatically. When the investor sells 20 units to another investor, the tokens and the money change hands in the same transaction.
Most such platforms use a permissioned blockchain. This is a blockchain that only approved members, such as banks and fund managers, can join. Fund managers also use tokenisation for fund units, linked to fund administration. Lenders use it for loans, as a newer form of securitisation. The tokens are held through MPC wallets and crypto custody.
In India, shares already settle one day after the trade, under T+1 settlement. Tokenisation aims at same-day or instant settlement. Banks and exchanges around the world are running pilots, but few tokenised assets are in wide use yet.