ONDC Working On Financial Services; NPCI Gets RBI Nod To Start Testing
An expert group is working on nuances of financial contracts to be offered using the platform; NPCI to start testing settlement services by month-end
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Open Network for Digital Commerce (ONDC) has appointed a working group of experts to suggest ways to make financial products and services available using the network. "A working group has been instituted to develop specifications. It has members from banks, both public and private, insurance companies and mutual funds, among others," said a person close to the development requesting anonymity.
ONDC is an open e-commerce protocol set up by the commerce ministry's Department of Promotion of Industry and Internal Trade. The network seeks to make online commerce accessible to buyers, sellers and logistics operators who are not part of the e-commerce revolution in the country.
At present, around one percent of sellers in the country are part of the e-commerce ventures and around six per cent byers use online platforms.
At present, the network in the Beta stage, and is being tested for groceries and food for hyperlocal needs in certain areas.
The person added that the task cut out for the group is to identify solutions required specifically for selling of financial products. "Each domain needs nuancing and financial products specifically, say, for taxation and contracts. A digital contact for grocery will be different from a financial product."
To begin with, the group is focusing on 'sachetising' so that customers can have a very definitive product.
As per the plan, same as for e-commerce wherein sellers and buyers can join the ONDC network, and sellers across e-commerce platforms which are linked to the network are visible to all buyers irrespective of which e-commerce platform they login from, financial products and services of participating institutions will be available on the same platform. Users will get to compare and select a product as per requirement.
Banks have shown interest in ONDC and the likes of State Bank of India, Bank of Baroda, Punjab National Bank, Kotak Mahindra Bank, Axis Bank, HDFC Bank, IDFC First Bank, ICICI Bank, UCO Bank, SIDBI and NABARD have already picked up stake in the network.
It is noteworthy that the United Payments Interface (UPI), which started slowly and then witnessed a Cambrian moment wherein transactions using the platform exploded, is also backed by financial institutions. It is no wonder experts are drawing parallel between the two platforms.
The person also added that the National Payments Corporation of India (NPCI) has got the permission from the Reserve Bank of India to be a part ONDC.
"NPCI will start testing by the end of this month for settlement and reconciliation services. It will not be the only one; there will be other banks also which will come in," added the person.