Open Network for Digital Commerce (ONDC) is poised to integrate leading banks such as HDFC Bank, IDFC First Bank, and Karnataka Bank, along with fintech firms like Fibe, to extend credit services to underserved regions, sources report.
This strategic integration will enable participating banks to offer unsecured personal loans and GST-based invoice loans to small merchants and retailers in financially underserved areas across India.
This move comes as ONDC begins early pilots for credit disbursals, involving Tata Group’s super app Tata Neu and credit marketplace Paisabazaar to source customers, while lenders like DMI Finance and Aditya Birla Finance provide the loans.
IDFC First Bank, in response to a query from ET, stated, “Currently, IDFC First Bank provides ONDC network participant accounts and reconciliation service provider components, which can be integrated with various network participants to reconcile and perform settlement activities.” Other financial institutions contacted by ET did not respond by press time.
Hrushikesh Mehta, Senior Vice President of Financial Services at ONDC, highlighted the significance of this initiative for MSME financing. “Small ticket loans for any purpose in remote villages haven’t been accessible from formal credit institutions. Similarly, insurance and mutual funds are largely limited to tier-1, tier-2 cities,” he said in an interview with ET. Mehta emphasized the efficiency of ONDC’s online loan application process, where customers can receive loan sanctions in minutes and disbursals within an hour, significantly reducing traditional processing times.
In addition to consumer loans, ONDC plans to introduce B2B credit services, offering large loans ranging from ₹1-1.5 crore. Protocols for these services are expected to be published by August, with a pilot launch slated for December.
ONDC is also exploring small ticket, short-tenure loans for farmers and merchants, utilizing alternative data from platforms such as Stellapps, Bizom, and Absolute. This data, combined with information from account aggregators and credit bureaus, will help lenders assess customer creditworthiness.
Beyond credit, ONDC is expanding into insurance and investments. Initially offering marine, health, and motor insurance, the platform is developing a protocol for life insurance and has conducted a pilot transaction for marine insurance with InsuranceDekho and Bajaj Allianz. On the investment side, ONDC plans to launch mutual funds within a month, starting with passive funds like index funds and liquid funds.
Currently, ONDC has five loan service providers, including EasyPay, Tata Digital, and Paisabazaar, and two lenders, DMI Finance and Aditya Birla Finance, live on the network. Nilay Patel, founder of EasyPay, noted that the integration of more banks and NBFCs into the platform would increase the adoption of these services, offering small businesses access to credit at lower interest rates and improving their Cibil scores.
EasyPay, a technology service provider, assists banks and NBFCs in integrating into the network and provides credit to small merchants within the ecosystem.
