Decoding the Open Credit Enablement Network (OCEN) with Hrushi Mehta
Sun Oct 02 2022
- The Open Credit Enablement Network (OCAN) can help address the significant credit gap for MSMEs in India, with a potential addressable credit gap of about 25.8 trillion rupees.
- OCAN provides APIs that enable lenders and loan service providers to access data and offer loans to MSMEs, using standardized communication between parties.
- The foundation for underwriting MSMEs includes GST data, bank statement data, and repayment information sourced from credit, with ICA and KYC providing digital reputation verification.
- Okan's product is tailored to the needs of restaurants, requires less documentation, and delivers loans quickly, with automation being key in making loan processes more efficient and secure.
- The Gem Sahai program provides invoice financing for MSMEs registered on the government team marketplace, allowing them to take on larger orders they previously couldn't fulfill due to lack of liquidity.
- Online marketplaces can provide credit to rural artisans, motivating them to integrate into existing online marketplaces, with digitization reducing costs and NBFCs and micro-finance institutions moving towards digital platforms to remain competitive.
- Unlocking credit is a major challenge due to strict regulations that limit who banks can lend to and the availability of necessary documents, with education and time needed to address behavioral issues related to fraud, consumer behavior, and ecosystem player behavior in accessing credit.
- Philanthropy can provide time-bound credit guarantees or interest subsidies to spur adoption of new digital credit rails and help evolve credit policies in corporate India, with a gender-specific incentive encouraging women's participation in the labor market.
- Non-profit organizations with social trust can be effective in changing behaviors related to credit awareness, but marrying their field building work with technology acquisition could support initial hurdles for individuals accessing credit.
- Providing initial support and nudges can increase activation rates for edtech solutions designed for underprivileged backgrounds, building on the digital infrastructure in India that has been put in place over the last decade.
- Building a public good as a private sector individual can be slow and frustrating, but the end result is fulfilling due to its high impact.