ONDC to Integrate Banks and Fintech Firms to Boost Small Merchant Loans

The Open Network for Digital Commerce (ONDC) is planning to integrate several major banks, including HDFC Bank, IDFC First Bank, and Karnataka Bank, along with fintech companies like Fibe, in the coming months. This information comes from people familiar with the matter.

With this integration, the participating banks will offer unsecured personal loans and goods and services tax-based invoice loans. These loans will mainly target small merchants and retailers in financially underserved areas across the country.

This initiative follows ONDC’s recent efforts to conduct early pilots for credit disbursals. They have already integrated Tata Group’s super app, Tata Neu, and credit marketplace Paisabazaar to find customers and lenders like DMI Finance and Aditya Birla Finance, who provide loans.

In response to an email query by ET, IDFC First Bank stated, “We would like to state that currently IDFC First Bank provides ONDC network participant account as well as reconciliation service provider component, which can be integrated with various network participants to reconcile and perform settlement activity.”

This move by ONDC aims to support small businesses and retailers who often face challenges in accessing credit, thus helping to boost economic growth in less served regions of India.