ONDC expands into digital lending; to offer loans in 6 minutes

After hitting the 12 million monthly transactions milestone, the state-owned network Open Network for Digital Commerce (ONDC) has forayed into financial services, launching APIs for digital lending.

The government-funded nonprofit that aims to improve online shopping by creating an open e-commerce network has launched “unsecured credit service to salaried and self-employed people. "ONDC is set to revolutionise access to financial services by integrating banks and fintechs, offering faster, paperless credit solutions," a statement says.

The new offering is integrated with 9 buyer applications (also known as lending service providers) and 3 lenders. The buyer applications include Easypay, Paisabazaar, Tata Digital, Invoicepe, Cliniq360, Zyapaar, Indipe, Tyreplex and Paynearby. The lenders include Aditya Birla Finance, DMI Finance and Karnataka Bank.

ONDC says the fully digital and paperless loans are available in just “6 minutes”. To deliver the loan digitally, paperlessly, and in just 6 minutes, the entire credit process integrates four digital public goods — account aggregator for data, digilocker/Aadhaar for KYC, eNACH / eMandate for repayment and Aadhaar eSign for agreement signing. The government-led platform’s initiative is set to extend credit access to remote and underserved areas.

“This development represents a major step forward in democratizing access to credit,” said T Koshy, MD & CEO, ONDC. “By integrating multiple digital systems into a single process, we are simplifying the borrowing experience and expanding credit availability even for remote and underserved regions. This innovation not only reduces operational costs for both lenders and buyer applications but also enhances financial inclusion, fostering economic growth and opportunity across the country. This goes well with ONDC's vision of inclusion as well, now extending to financial inclusion”

The platform says the new digital credit process is poised to make a substantial impact by delivering loans “seamlessly and quickly”. With the ONDC protocol providing a standardised framework, both lender's and buyer applications can achieve greater efficiency and broader reach. “Lenders simply need to adopt the ONDC Protocol to gain access to multiple distribution points. Similarly, buyer applications with the ONDC Protocol will have access to multiple lenders with a single integration.”

The platform says there is a strong pipeline of buyer applications, with interest from players like Mobikwik, Rupeeboss and Samridh.ai, and lenders such as HDFC Bank, IDFC First Bank, Faircent, Pahal Finance, Fibe, Tata Capital, Kotak Mahindra Bank, Axis Finance, FTCash and Central Bank of India. In future, ONDC Network plans to introduce GST invoice financing loans by September end 2024. “Subsequent products will include purchase financing for individuals and sole proprietors, as well as working capital lines for partnerships and private limited companies.”

In India, more than 12 million sellers earn their livelihood by selling or reselling products and services, the ONDC data shows. However, only 15,000 of these sellers (0.125% of the total) have enabled e-commerce. ONDC was incorporated in December 2021, with the Quality Council of India and Protean eGov Technologies Limited as founding members.