Inside ONDC’s financial services game plan over next 18 months

Additionally, by September-end, it will be starting GST invoice financing loans. (Representative image)

After disrupting food delivery and logistics, the Open Network for Digital Commerce (ONDC) is only 18 months away from rolling out a gamut of financial services offerings for both sellers and customers.

The network launched working capital credit on August 22, wherein sellers could access digital, paperless loans in six minutes. It is also opening up small-ticket unsecured loans for salaried and self-employed individuals.

Additionally, by September end, it will be starting GST invoice financing loans.

But that’s not all, Hrushikesh Mehta, SVP- financial services, ONDC shared that in the coming months, the network is set to offer full-suite of B2B and B2C financial services including insurance, mutual funds and credit cards; and some unique ones like crop yield financing and cow financing.

Sharing the roadmap, Mehta said, “We have unsecured personal loans. GST seller financing is the first alternative data use case. Then there will be crop yield financing, Shiprocket merchant financing. We're talking to seller apps for cow financing as well -- that would be the hardest one to do and I hope we can, in the next six months deploy that.”

“After that we have purchase financing and B2B credit for working capital lines. Post that, if we could bring credit cards…Now that's the full suite of products. If we are able to deploy all these in the next year or 18 months, you have got the full suite of credit on ONDC,” he added, speaking to the media in Mumbai.

Roadmap for insurance, mutual funds

In January, ONDC started piloting credit, insurance and mutual funds with a few select financial services partners.

As the network went live with the credit offering first, it had integrated nine buyer applications (also known as Lending Service Providers) and three lenders. These 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 is further in talks with many buyer applications with interest in expanding this digital credit model, such as 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.

T Koshy, CEO and MD of ONDC said that the while the network had started working on the protocol for insurance, it did one trial transaction last month and will be doing trial transaction for the mutual fund products next month.

Mehta said, “Insurance we have already deployed on one buyer app and two more are coming. For health also we are live, but the company doesn’t have license yet so that is shelved for now. For motor insurance, we should be live in a month or so.”

“Mutual funds will go live next month. But I want to reach 100-200 transactions before that,” Mehta said.

In terms of credit card distribution which is still at very early stages, Mehta shared that ONDC has been in talks with Mastercard who has shown interest in joining the network.

Regulations and data sharing

ONDC is integrating several digital public infrastructures for data sharing and KYC process. For its first loan product, the credit process integrates Account Aggregator for data, Digilocker / Aadhaar for KYC, eNACH / eMandate for repayment and Aadhaar eSign for agreement signing.

“This is set to extend credit access to remote and underserved areas of the country revolutionizing digital lending for India,” ONDC had said in a statement.

Koshy further added, that the whole idea of foraying into fintech is to bring simple products, but ONDC won’t be deciding on what products to bring in.

“The product is decided by the lenders or the regulatory framework. We don't touch the regulations. We only create the digital rails for consumers and lenders to talk to each other in a very serious fashion, in a very speedy fashion,” he said.

Mehta said that ONDC doesn’t store any of the transaction data. “It is stored in the app where the user is transacting. For instance, Shiprocket already have transactional information. With user consent, they will share that transactional information in a standardized format that we've created for them,” he said.

“So typically, what would be the vintage, the quality of delivery, the number of orders and the value of the orders accepted, delivered and paid, and those sort of things,” he added.

Growth in transactions

On the food delivery and logistics side, Koshy shared that ONDC has already crossed 12 million transactions a month in July. And by the end of FY25 (March-April), the platform will see 30-40 million transactions every month along with over one million merchants on boarded.

According to the Economic Survey 2024, transactions on the ONDC have surged past 68 million since its inception in 2022. Previously in June 2024, it saw a 12 percent month-on-month growth in transactions to 9.95 million.