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Open Credit Enablement Network: Meaning, How it Works and more

line of credit vs credit card

Numerous technological disruptions over the last ten years have changed India’s financial landscape. This is also true for last-mile lending, which has changed drastically because of this technological revolution. Technology is advancing at a breakneck pace to keep up with the demands of the “next billion” customers, who will soon be armed with smartphones and internet access. With the launch of the Open Credit Enablement Network, or OCEN, a string of innovative solutions aimed at facilitating and securing credit access for last-mile borrowers has been introduced. Small businesses will benefit greatly from the implementation of this framework because it is designed to make it easier for micro, small, and medium-sized enterprises (MSMEs) to obtain formal lending. Let’s look at how OCEN can speed up digital lending for MSMEs.

What is Open Credit Enablement Network (OCEN)?

The government announced the opening of OCEN at the Global Fintech Festival 2020. It is a framework of application programming interfaces (APIs) designed to facilitate interaction among lenders, lending service providers (LSPs), account aggregators, and small business borrowers.

The APIs will serve as a connecting thread between marketplaces, fostering innovation and the development of new financial products tailored to the needs of last-mile borrowers. The framework will establish a common language so that lenders, LSPs, and aggregators can work together and form partnerships to develop innovations in MSME credit and the digital infrastructure that supports it.

OCEN is a component of the larger India Stack framework of open APIs, which enables businesses, developers, and service providers to use a common digital infrastructure to streamline digital transactions and data-driven processes. The implementation of OCEN has the potential to transform the way MSME lending is conducted in India, which is essential for tapping the credit-starved industry’s potential.

Open Credit Enablement Network

How did OCEN come to the limelight?

Let’s be honest.

One of the most time-consuming procedures is still loan application. Due to the mountains of paperwork, the length of time, and the high risk of denial, the loan clearance process typically rejects applicants, leaving them vulnerable to loan sharks’ debt traps. Think about getting a monthly interest payment of 7%! ‍‍

OCEN comes into play in this scenario. It is the Indian version of the Open Banking system already in place in the European Union.

On July 22, 2020, at the Global Fintech Festival, Nandan Nilekani, announced the launch of the Open Credit Enablement Network (OCEN), a decentralised network that facilitates the sharing and exchange of credit information.

It aims to offer a more secure and decentralised alternative to conventional credit reporting systems, which are frequently centralised and managed by a small number of powerful institutions.

OCEN enables individuals and organisations to share credit information with others in a secure manner while retaining control over who has access to their data.

It also makes it possible to develop new financial services and products, such as peer-to-peer lending and credit scoring, and by working with the recently released account aggregator framework, it aims to expand India’s access to credit.

The overall objective of OCEN is to promote greater financial inclusion and expand access to credit for individuals and small businesses.

How OCEN works?

OCEN is a component of the India Stack framework, which was launched in conjunction with the establishment of the Unique Identification Authority of India (UIDAI). In 2009. With Aadhaar and UPI as its foundation, India Stack has disrupted the Indian Fintech industry and expanded to a variety of applications via open APIs. These APIs serve as public digital infrastructure, which a variety of digital platforms leverage.

This infrastructure’s overall objective is to facilitate cashless, paperless, and presence-free service delivery. OCEN is a component of this framework and aims to alter how MSME entrepreneurs are provided with credit. Moreover, it reimagines India’s credit ecosystem by enabling new players (such as digital platforms) to play significant roles.

The various participants in the OCEN ecosystem are the LSPs or credit-offering digital platforms; the TSPs, or fintech; the lenders, or banks, NBFCs, and other loan providers; and the borrowers, or MSME business owners, who use the credit. OCEN, which provides an API for every stage of the loan lifecycle, from application to disbursement and repayment, can assist all parties in integrating their processes and digitising the entire lending process. LSPs, TSPs, and lenders can make their digital infrastructure accessible to third parties and collaborate to develop the most suitable credit options for the customer.

Stakeholders in the OCEN ecosystem

The various participants in the OCEN ecosystem are:

1. Loan Service Provider (LSP)

2. Technology Service Provider (TSP)

3. Lender

4. Borrower

1. Loan Service Provider (LSP)

Any digital platform with a customer-facing interface that can source borrowers. A digital platform may be a web application or an Android application with an established core offering and customer base. They can expand their product offerings by originating and facilitating credit on their platform.

2. Technology Service Provider (TSP)

A FinTech company that collaborates with both lenders and platforms to adopt the OCEN protocol and use it to build customised credit programs. TSPs include Embedded Finance providers.

3. Lender

Banks/NBFCs/small finance banks provide the Embedded Finance Infrastructure company with capital and access to core banking networks.

4. Borrowers

Micro, small, and medium-sized enterprises (MSMEs) or individual consumers will utilise credit options available on the LSP’s platform via a secure digital process.

What does the future look like for OCEN?

Why is the introduction of OCEN hailed as the next revolutionary development in the country’s loan industry? Let’s delve deeply into OCEN to discover what it is, how it arose, what the future holds, potential obstacles, and other information.

Imagine driving to your destination. Which route would you take—the one with a lot of traffic or the one that is a freeway?

Open Credit Enablement Network is the direct route to the credit line that you seek. This obstruction-free path is crucial for a nation like India, where accessibility concerns frequently result in credit lines being exhausted.

In addition to making, it easier for Next Half Billion Internet Users to apply for loans on demand, OCEN will better serve the MSME sector, small ticket borrowers, etc.

Through APIs and deft integrations, OCEN would bring many participants in the lending ecosystem together under one roof. In addition to facilitating businesses’ access to a market with a variety of loan options, this enables lenders to design customised credit instruments.

What are the challenges for OCEN?

There might be a potential increase in the severity of loan defaults because of the inclusion of credit and anticipated growth in the number of borrowers in OCEN!

Creating a task force, an online forum for resolving disputes, and a digital ombudsman may be required to address this issue. These procedures will allow more private companies to enter the market, thereby increasing the adoption of technology.

Data transparency regarding loans may be difficult. As the volume of data increases, businesses will compile a list of defaulters, who may be excluded from the lending process.

Therefore, the lending procedure must be exhaustive, and every effort must be made to provide prospective borrowers with the necessary financing.

Cybersecurity threats must also be considered. Recently, the data of 110 million customers of the financial company was auctioned off on the dark web. The information consists of names, phone numbers, email addresses, places, GPS coordinates, and information about mobile devices.

Similar data breaches that have happened in India and other nations highlight the need to enhance the security of digital platforms and workflows.

Due to the absence of a data protection law in India, all parties involved must be aware of the dangers associated with data privacy, confidentiality, and security.

Finally, technical ignorance may result in financial fraud or online theft. Consequently, targeted digital literacy programmes need to be put into place at the same time as new platforms and technologies are made available.

Open Credit Enablement Network


If implemented correctly, OCEN has the potential to transform the Indian SME lending landscape. By utilising the technological prowess of numerous stakeholders, including lenders, LSPs, and TSPs, the digital infrastructure that will be built using the framework can facilitate better service for the MSME borrower. It will give small and medium-sized enterprises the luxury of choice while providing them with a safe and accessible way to obtain formal credit. The loan application process will be streamlined, the turnaround time will increase, and credit underwriting will be based on factors such as a company’s continuous cash flow, rather than on outmoded methods such as credit history analysis. Long-term, the implementation of OCEN will have a significant positive impact on MSME as well as the GDP of the nation.


1. What is the Open Credit Enablement Network (OCEN)?

Ans: The Open Credit Enablement Network (OCEN) is an open-source technology framework that enables interoperability and connectivity among various stakeholders in the credit ecosystem. It aims to streamline credit delivery processes and facilitate better access to credit for individuals and businesses.

2. Who developed OCEN?

Ans: The Open Credit Enablement Network (OCEN) was developed by the Reserve Bank of India (RBI) in collaboration with industry participants, including banks, non-banking financial companies (NBFCs), fintech companies, and other stakeholders.

3. What is the purpose of the Open Credit Enablement Network (OCEN)?

Ans: The primary purpose of OCEN is to create a standardised and interoperable credit infrastructure that allows lenders and borrowers to seamlessly connect and transact. It aims to simplify credit delivery processes, reduce friction, and promote financial inclusion by leveraging technology.

4. How does the Open Credit Enablement Network (OCEN) work?

Ans: OCEN provides a common set of APIs (Application Programming Interfaces) that enable different lenders, loan marketplaces, and other credit providers to connect and access borrower data securely. It allows for real-time data exchange, verification, and decision-making, enabling faster and more efficient credit assessment and disbursal processes.

5. Is the Open Credit Enablement Network (OCEN) limited to India?

Ans: While OCEN was initially developed by the Reserve Bank of India (RBI) for the Indian credit ecosystem, its underlying principles and technology framework can be adopted and customised by other countries or regions to build their open credit ecosystems.

6. Are there any regulatory guidelines associated with the Open Credit Enablement Network (OCEN)?

Ans: The Reserve Bank of India (RBI) has provided guidelines and frameworks for the implementation of OCEN in India. These guidelines ensure compliance with existing regulations, data privacy, and security standards.

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