Through this integration, participating banks will offer unsecured personal loans and goods and services tax-based invoice loans, targeting small merchants and retailers in financially underserved regions across the country, they said.
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It comes at a time when ONDC has started conducting early pilots for credit disbursals by integrating Tata Group super app Tata Neu and credit marketplace Paisabazaar to source customers and lenders, such as DMI Finance and Aditya Birla Finance, to provide loans.
In response to a query emailed by ET, IDFC First Bank said, “We would like to state that currently IDFC First Bank provides ONDC network participant account as well as reconciliation service provider component, which can be integrated with various network participants to reconcile and perform settlement activity.”
Queries emailed by ET to other financial institutions did not elicit a response till press time.
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“If you think about MSME (micro, small and medium enterprises) financing, small ticket loans for any purpose in remote villages in India haven’t been accessible from formal credit institutions. Similarly, insurance is largely limited to tier-1, tier-2 cities. For mutual funds, it’s a similar story,” Hrushikesh Mehta, senior vice president of financial services, ONDC, told ET in an interview.
“Today, if a customer applies for a loan with all the paperwork, it takes days and sometimes weeks and finally it may get rejected. But here (loans powered by ONDC), if you apply online, in six-seven minutes, you have the sanction and after one hour you will get the disbursal. We are creating the opportunities for lenders to access customers they wouldn’t otherwise have and customers to access loans they wouldn’t have otherwise,” he said.
Mehta did not comment on which banks are joining the network.
Also read | BHIM looks to bulk up with ONDC to take on digital payment heavyweights
B2B credit platform on the anvil
ONDC also plans to introduce business-to-business credit services, offering large loans of Rs 1-1.5 crore. However, these products are still in the pipeline and will be built once the consumer and business credit piece goes live.
The protocol for these services is expected to be published by August, with a pilot launch set for December, Mehta said.
Additionally, ONDC is exploring small ticket, short tenure loans to customers including farmers and merchants based on alternative data from platforms such as dairy tech startup Stellapps, retail intelligence platform Bizom and agritech startup Absolute. This data, combined with banking details from account aggregators and credit bureau data, will help lenders assess the creditworthiness of customers. These platforms are also in the process of being integrated into ONDC.
Also read | ONDC to touch 10 million transactions in June: official
Insurance and investments
Beyond credit, ONDC is increasingly expanding into insurance and investments segments as well. Initially offering marine, health and motor insurance, it is now developing a protocol for life insurance. The platform conducted a pilot transaction for marine insurance with InsuranceDekho and Bajaj Allianz. On the investment side, ONDC plans to go live with investment products within a month, starting with mutual funds.
“For a set of population that is used to chit funds and fixed deposits, there is no point in doing more complex products. Even in mutual funds, we will start with passive funds like index funds and liquid funds. So, the idea is now to create access to a relatively simple product that provides the opportunity to build wealth,” Mehta said.
Current players
ONDC currently has five loan service providers – including EasyPay, Tata Digital and Paisabazaar – and two lenders, DMI Finance and Aditya Birla Finance, live on the network.
“As more banks and NBFCs (non-banking financial companies) come into the platform, there will be a greater adoption of these services,” said EasyPay founder Nilay Patel. “Small businesses will have a variety of needs for credit and for those needs, they end up borrowing at a very high interest rate. But when they go to ONDC, everything is automated, where they will be able to avail loans at a cheaper rate and their Cibil score also gets improved.”
EasyPay, a technology service provider, helps banks and NBFCs integrate into the network and offers credit to small merchants in the ecosystem.
