ONDC expands to financial services; launches quick digital lending

Open Network for Digital Commerce (ONDC) on Thursday said it launched a digital lending initiative, which will offer paperless loans in six minutes, thus marking its entry into the financial services space.

According to a statement, ONDC will now offer unsecured credit to salaried and self-employed individuals through nine buyer applications, including Easypay, Paisabazaar, Tata Digital, and Paynearby, as well as three lenders: Aditya Birla Finance, DMI Finance, and Karnataka Bank.

ONDC also revealed that buyers like Mobikwik, Rupeeboss, and Samridh.ai have shown strong interest in expanding this digital credit model. A range of lenders, including HDFC Bank, IDFC First Bank, Faircent, Pahal Finance, Fibe, Tata Capital, Kotak Mahindra Bank, Axis Finance, FTCash, and Central Bank of India, are considering participating in this initiative, it said.

ONDC is simplifying the borrowing experience and expanding credit availability even for remote and underserved regions by integrating multiple digital systems into a single process, ONDC MD and CEO T Koshy said. 

"This innovation not only reduces operational costs for 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, now extending to financial inclusion," he added.

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Following the launch of unsecured loans, ONDC Network plans to introduce GST invoice financing loans by the end of September 2024. Subsequent products will include purchase financing for individuals and sole proprietors and working capital lines for partnerships and private limited companies, it said.

Earlier this month, ONDC said it reached a new record of 12 million monthly transactions in July, with daily orders hitting 430,000. Mobility led with 4.4 million orders, followed by food and beverage (1.7 million), grocery (1.4 million), and fashion (0.6 million).

The remaining 4 million orders were spread across on-network logistics, beauty and personal care, home and kitchen, and retail vouchers.

ONDC's CEO expects the network to reach 40-50 million monthly transactions by the end of the year.