The Open Network for Digital Commerce (ONDC), a government-backed initiative launched in 2021, has steadily grown to become a major player in India’s digital commerce landscape, now handling around 12 million transactions per month. The network, which was originally designed to make e-commerce more inclusive for small sellers and merchants, is now venturing into the financial services sector.
Introducing Digital Unsecured Loans
On Thursday, ONDC announced the launch of fully-digital unsecured loans for salaried individuals and the self-employed. This credit offering, integrated with nine buyer applications or lending service providers and three lenders, is set to revolutionize digital lending in India. The buyer applications include Easypay, Paisabazaar, Tata Digital, Invoicepe, Cliniq360, Zyapaar, Indipe, Tyreplex, and Paynearby, while the lenders are Aditya Birla Finance, DMI Finance, and Karnataka Bank.
To ensure a seamless digital experience, ONDC’s credit process incorporates four digital public goods: Account Aggregator for data, Digilocker/Aadhaar for KYC, eNACH/eMandate for repayment, and Aadhaar eSign for agreement signing. This integration enables the entire loan process to be completed digitally in just six minutes, extending credit access to remote and underserved areas across India.
Complementing Commerce with Financial Services
ONDC’s entry into financial services is seen as a natural progression, complementing its existing e-commerce framework. According to T. Koshy, MD and CEO of ONDC, the network’s digitized transactions can now serve as collateral, providing small businesses with access to working capital finance. The addition of credit, insurance, and mutual fund products further enhances the network’s value proposition, offering comprehensive financial solutions to its users.
“The same network that digitizes transactions can now provide credit, insurance, and even help save small amounts daily. This complements the existing services and makes the platform more valuable for users,” Koshy explained to The Week.
Future Plans and Expansion
ONDC has ambitious plans to continue expanding its digital credit model, with a strong pipeline of buyer applications, including interest from fintechs and banks. Following the launch of unsecured loans, ONDC plans to introduce GST invoice financing loans by the end of September. Additional products in the pipeline include purchase financing for individuals and sole proprietors, working capital lines for partnerships and private limited companies, as well as loans for farmers and credit cards, though these are planned for later stages.
The platform will also offer insurance and mutual fund products, further broadening its financial services portfolio. As a commerce platform, ONDC is expected to continue growing, with Koshy expressing optimism about achieving more than 30 million transactions per month by March 2025, with an ultimate goal of reaching one million transactions per day.
