Banking and Finance on ONDC

India is changing how people buy and sell online through a new system called the Open Network for Digital Commerce (ONDC). Introduced in December 2021, this network is breaking down barriers that once made it hard for smaller businesses to sell online. While ONDC is already helping shops and delivery services, its biggest impact could be on how we handle money and banking.

Unlike existing online shopping platforms that work in closed systems, ONDC creates an open network where any business can join and reach customers directly. Think of it as building new digital roads that connect all sellers and buyers, whether they're small local shops or large companies. As more businesses join this network, it's starting to change how people pay, save, and manage their money.

India is changing how people buy and sell online through a new system called the Open Network for Digital Commerce (ONDC). Introduced in December 2021, this network is breaking down barriers that once made it hard for smaller businesses to sell online. While ONDC is already helping shops and delivery services, its biggest impact could be on how we handle money and banking.

Unlike existing online shopping platforms that work in closed systems, ONDC creates an open network where any business can join and reach customers directly. Think of it as building new digital roads that connect all sellers and buyers, whether they're small local shops or large companies. As more businesses join this network, it's starting to change how people pay, save, and manage their money.

The rise of ONDC has inspired multiple innovations in the banking and finance sector, as banks, fintech firms, and digital payment platforms work to support and take advantage of the platform's benefits.

To know more about ONDC’s growth journey and impact on e-commerce, check out one of our earlier blogs: https://sellersetu.in/blog/ondc-growth!

Faster Loans and Helping Hand to MSMEs

ONDC is helping local businesses enter the digital economy, creating a need for financing to support inventory, logistics, and growth. To meet this, banks and NBFCs are partnering with ONDC to offer tailored financing, including short-term loans and data-driven credit assessments based on transaction history. This makes it easier for SMEs to access affordable loans, supporting their growth and strengthening the overall economy.

ONDC launched a six-minute digital loan service on August 22, 2024, allowing quick, paperless access to loans through various apps to help underserved areas. Recently, it also introduced fully digital unsecured loans for salaried and self-employed individuals using platforms like Easypay and Paisabazaar, with lenders like Aditya Birla Finance and Karnataka Bank involved. This initiative aims to improve access to credit, especially in remote areas, and promote financial inclusion. By the end of September 2024, ONDC plans to further expand its offerings by introducing GST invoice financing loans for SMEs.

The rise of ONDC has inspired multiple innovations in the banking and finance sector, as banks, fintech firms, and digital payment platforms work to support and take advantage of the platform's benefits.

To know more about ONDC’s growth journey and impact on e-commerce, check out one of our earlier blogs: https://sellersetu.in/blog/ondc-growth!

Faster Loans and Helping Hand to MSMEs

ONDC is helping local businesses enter the digital economy, creating a need for financing to support inventory, logistics, and growth. To meet this, banks and NBFCs are partnering with ONDC to offer tailored financing, including short-term loans and data-driven credit assessments based on transaction history. This makes it easier for SMEs to access affordable loans, supporting their growth and strengthening the overall economy.

ONDC launched a six-minute digital loan service on August 22, 2024, allowing quick, paperless access to loans through various apps to help underserved areas. Recently, it also introduced fully digital unsecured loans for salaried and self-employed individuals using platforms like Easypay and Paisabazaar, with lenders like Aditya Birla Finance and Karnataka Bank involved. This initiative aims to improve access to credit, especially in remote areas, and promote financial inclusion. By the end of September 2024, ONDC plans to further expand its offerings by introducing GST invoice financing loans for SMEs.

The MSME ministry has launched the 'MSME TEAM' initiative to onboard 500,000 micro and small enterprises onto the Open Network for Digital Commerce (ONDC), with half of these being women-owned. This initiative provides financial support for various aspects of onboarding, alongside the Yashasvini campaign, which aims to train 100,000 women entrepreneurs and facilitate easier access to loans and online selling opportunities.

The Yashasvini Initiative, initiated in Karnataka, basically includes mass awareness campaigns to help women entrepreneurs access government schemes and improve their market presence through online platforms like ONDC, addressing challenges such as credit access and technology.

Data-Driven Approach from Banks

The financial data generated on ONDC provides banks and lending institutions with valuable insights for more accurate credit risk assessments. Lenders such as HDFC Bank, ICICI Bank, and Axis Bank are now utilizing AI and machine learning to analyze buyer and seller activity within the ONDC network, which helps assess repayment capabilities and reduce default rates.

Real-time data helps banks manage risks better and quickly change credit policies, especially for local and small businesses where traditional methods may struggle. This improves credit evaluations and offers loan terms that suit borrowers' needs, helping more people access finance and supporting local businesses.

Recent Blockchain Developments

As ONDC develops, there is growing interest in using blockchain technology to improve transaction security and transparency. Banks like HDFC, ICICI, and Axis are looking into blockchain applications for smoother payment settlements and better data privacy. ONDC has partnered with Dhiway to create a distributed ledger network that enhances secure digital interactions. These blockchain advancements are expected to boost the efficiency and reliability of transactions within the network.

The MSME ministry has launched the 'MSME TEAM' initiative to onboard 500,000 micro and small enterprises onto the Open Network for Digital Commerce (ONDC), with half of these being women-owned. This initiative provides financial support for various aspects of onboarding, alongside the Yashasvini campaign, which aims to train 100,000 women entrepreneurs and facilitate easier access to loans and online selling opportunities.

The Yashasvini Initiative, initiated in Karnataka, basically includes mass awareness campaigns to help women entrepreneurs access government schemes and improve their market presence through online platforms like ONDC, addressing challenges such as credit access and technology.

Data-Driven Approach from Banks

The financial data generated on ONDC provides banks and lending institutions with valuable insights for more accurate credit risk assessments. Lenders such as HDFC Bank, ICICI Bank, and Axis Bank are now utilizing AI and machine learning to analyze buyer and seller activity within the ONDC network, which helps assess repayment capabilities and reduce default rates.

Real-time data helps banks manage risks better and quickly change credit policies, especially for local and small businesses where traditional methods may struggle. This improves credit evaluations and offers loan terms that suit borrowers' needs, helping more people access finance and supporting local businesses.

Recent Blockchain Developments

As ONDC develops, there is growing interest in using blockchain technology to improve transaction security and transparency. Banks like HDFC, ICICI, and Axis are looking into blockchain applications for smoother payment settlements and better data privacy. ONDC has partnered with Dhiway to create a distributed ledger network that enhances secure digital interactions. These blockchain advancements are expected to boost the efficiency and reliability of transactions within the network.

(Credit: Stanford Online)

Digital Security and Secure Credit

The banking sector is working to integrate India's digital identity tools, like Aadhaar, with ONDC to make the verification process easier and more secure. Using Aadhaar for verification helps banks save time and money compared to traditional KYC methods, benefiting both consumers and businesses by improving security and reducing fraud.

In the future, ONDC could allow banks to offer special features, like automated credit scoring based on transaction history, making banking more accessible and better suited for our “digitally-forward” economy.

(Credit: Stanford Online)

Digital Security and Secure Credit

The banking sector is working to integrate India's digital identity tools, like Aadhaar, with ONDC to make the verification process easier and more secure. Using Aadhaar for verification helps banks save time and money compared to traditional KYC methods, benefiting both consumers and businesses by improving security and reducing fraud.

In the future, ONDC could allow banks to offer special features, like automated credit scoring based on transaction history, making banking more accessible and better suited for our “digitally-forward” economy.

ONDC is opening up big opportunities for India's banking and finance sector by providing useful transaction data that helps banks like HDFC, IDFC First Bank, and Karnataka Bank understand consumer behavior. This information allows them to create better products and services, giving small merchants easier access to personal loans and GST-based loans while helping underserved communities. As ONDC adds financial services and looks into blockchain technology for improved security, it is changing how digital finance is accessed and delivered, leading to a more connected and stronger economy.

If you're a seller interested in joining ONDC, SellerSetu is ready to assist you throughout the process. Complete the form below to schedule a demo and see how our expertise can simplify your onboarding and improve your overall experience!

ONDC is opening up big opportunities for India's banking and finance sector by providing useful transaction data that helps banks like HDFC, IDFC First Bank, and Karnataka Bank understand consumer behavior. This information allows them to create better products and services, giving small merchants easier access to personal loans and GST-based loans while helping underserved communities. As ONDC adds financial services and looks into blockchain technology for improved security, it is changing how digital finance is accessed and delivered, leading to a more connected and stronger economy.

If you're a seller interested in joining ONDC, SellerSetu is ready to assist you throughout the process. Complete the form below to schedule a demo and see how our expertise can simplify your onboarding and improve your overall experience!

Banking and Finance on ONDC

Banking and Finance on ONDC