OCEN 4.0 unveiled to facilitate short-tenor loans to MSMEs

Think tank Indian Software Products Industry Round Table (iSPIRT) unveiled the Open Credit Enablement Network (OCEN) 4.0 protocol to enable cash flow-based lending to micro, small and medium enterprises (MSMEs).

OCEN is a framework of application programming interfaces (APIs) for interaction between lenders, loan agents, collection and disbursement partners, derived data providers and account aggregators. Until now, OCEN was running only on the government e-marketplace GeM SAHAY and other pilots across the country.

In this iteration, along with updated API specifications, OCEN has added a registry and a product network. These features help unlock cash-flow-based lending to match scale, complexity and needs.


iSPIRT founder Sharad Sharma told ET the credit gap for MSMEs is $17-24 trillion and that less than 11% of MSMEs have access to formal credit.

“OCEN is solving these problems by creating a framework for short tenor and small ticket loans, allowing remote lenders to operate in distant geographies and allowing consented access of alternate sources of data,” Sharma said.

Tenor refers to the length of time that will be taken by the borrower to repay the loan along with the interest.

Among OCEN 4.0's wave one partners are loan agents such as Spice Money, Indifi and Finagg. Lenders include ICICI Bank, Kotak Bank, Union Bank and Axis Bank.

Disseminare and Finarkein Analytics, among others, count as technology service providers.

Cost per loan has been the primary deterrent for lenders to add short-term lending in their portfolios, Sharma said.

By enabling lenders minimise loan processing cost and collection costs, OCEN 4.0 allows them to give out small-ticket, short-tenor loans at scale . This will enable short-tenor cash-flow lending to many new segments of borrowers.

OCEN has been used so far to give short-tenor loans ranging from Rs 168 to Rs 8 lakh. “We are trying to solve for small businesses who can’t get one-year working capital loans because of uneven business performance over the past three years,” Sharma said.