The Open Network for Digital Commerce (ONDC), a government-backed initiative to enhance e-commerce penetration in India, is expanding its financial services venture. After successfully launching its digital lending platform, ONDC is now gearing up to offer sachetised insurance and micro-investment products, marking a significant expansion in its service offerings.
ONDC has started providing digital and paperless loans that can be processed in just six minutes. These loans are available to both salaried and self-employed individuals through a network of nine service providers and three lenders. Building on this success, ONDC plans to roll out other financial services, including health, marine, and life insurance products, as well as mutual funds, in the coming months.
The platform has already conducted initial transactions in health and marine insurance, and it is developing protocols for life insurance with plans to start offering these products by December. Mutual fund transactions are expected to begin by September, making ONDC one of the few e-commerce platforms to venture into such a wide range of financial services.
Lending services
ONDC is also deepening its presence in the lending market. By September 2024, the platform will introduce goods and services tax (GST) invoice financing loans, providing businesses with a new avenue for credit. Additionally, ONDC plans to offer purchase financing for individuals and sole proprietors, as well as working capital lines for partnerships and private limited companies. These new products will complement the unsecured loans currently available on the platform.
The lending services are designed to integrate seamlessly with ONDC’s existing ecosystem, allowing buyer applications like Paisabazaar, Tata Digital, and Easypay to connect with multiple lenders, including Aditya Birla Finance, DMI Finance, and Karnataka Bank. This integration aims to streamline the loan application process, making it faster and more efficient for users.
Future growth and industry impact
ONDC’s expansion into financial services is part of a broader trend where e-commerce platforms are increasingly exploring financial offerings to enhance their value proposition. This move positions ONDC as a key player in both the e-commerce and financial sectors, with the potential to significantly boost financial inclusion across India.
The platform is also preparing for future growth, with a strong pipeline of buyer applications and lenders poised to join the network. Notable names like Mobikwik, Rupeeboss, and HDFC Bank are expected to integrate into ONDC’s digital credit model soon.
