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Open Credit Enablement Network (OCEN)

OCEN is an initiative to unbundle lending and enable the creation of specialized entities, each specialized at one part of the job. Therefore, we envision the future of lending to be a partnership between multiple firms individually focused on sourcing/distribution, identity verification, underwriting, capital arrangement, recollections, etc. The entities like marketplaces who have high business-connect with their customers (businesses or individuals), can embed credit offerings in their applications now. These entities are referred to as Loan Agents’ (LAs) and were previously referred to as ‘Loan Service Providers’ (LSPs).

OCEN (Open Credit Enablement Network) aims at democratising the lending ecosystem. The core philosophy is using open networks to reach out to maximum borrowers and lenders, with reduced risk, more transparency, strict control on funds (both end use & collections) and thus building a robust lending ecosystem. At the borrower level, using consent driven architecture and personal data as information collateral, any type of borrower (even new to credit or people with poor credit scores), can access financing. The end-to-end digital processes not only reduces the total cost of operations, but also has the advantage of reaching out to anyone and everywhere, without the lender having a physical presence. For example, sitting out of Jaipur, a NBFC has disbursed OCEN loan on GeM Sahay to borrowers operating from Andaman Nicobar Islands, Manipur, Baramullah etc and the smallest loan transaction has been of Rs.160 for business purposes.

OCEN is the right protocol, to bring credit/finance to the bottom of the pyramid and at the same time lenders also make money with this same section of people at the bottom of the pyramid. OCEN not only levels the playing field between incumbents and challengers, but also reduces the concentration risk which comes with size at bigger players. Most MSMEs are working capital intensive businesses that need quick money and do not have collateral securities to put up to banks for conventional Cash Credit limits like financing. For such businesses, this is a tool to grow their businesses, and improve their credit scores.

Lenders see opportunities in not only sourcing new business, but also reduced risk due to high quality data and use of DPI (Digital Pubic Infrastructure), like GSTN, Account Aggregator, Digilocker and its associated APIs, like mobility, Health, Fastag etc.

Why OCEN

Low Cost of Acquisition >> The Borrower Agent brings his borrowers on the network, reducing the cost of acquisition through various channels. OCEN framework benefits the Lenders to gain easy access to borrowers. Not just borrowers of one network, but easy access to multiple sets of borrowers of multiple networks. 

Lower Cost of Underwriting >> The Borrower Agent also acts as a Provider of Derived Data along with other Underwriting data from various sources like GSTN and Account Aggregator which helps in lowering the Cost of Underwriting

Digitisation >> OCEN Digitises the whole process which involves various activities like Bureau pull, KYC validation, Account Aggregator data, E-Sign on documentation, e-NACH for repayment etc and reduces the time and effort of processing at reduced costs.

Reduced Cost of Collections >> OCEN provides a large opportunity to Lenders and Borrowers to participate in T4 (Type 4) loan products which have End Use Control and Collections control for ensuring higher portfolio quality and cash flow control as well as reduced Cost of collections

OCEN solves for MSME’s Credit requirements: Small Ticket Short Tenure Loan

Small businesses need loans of smaller amounts and for shorter tenures (15/30/90 days) for their businesses compared to larger businesses to help them navigate through the requirement of day-to-day Working Capital needs.

It also helps Lenders to create Loan books for smaller loans which are granular loan exposure on a rotational basis, compared to large bulky loans. Hence reducing concentration risk.

As these Loans are for short tenure, there is higher predictability and lower risk compared to long tenure loans in which recovery of loans may sometimes be a challenge. 

Loan Agent model​

The Loan Agent (LA) model is a departure from the Direct Sourcing Agent (DSA) model and is an ‘agent of the borrower’. The LA explains to borrowers their ‘bill of rights’ ensuring transparency and safeguarding of borrower interests. They educate the borrowers about the various credit product offerings, pricing and more details. They help the borrowers get access to formal, affordable credit at low interest rates and collaborates with lenders to create more tailored offerings for borrowers.

In their simplest form, LAs are a loan marketplace that enables borrowers to compare loan offers from multiple lenders and choose the best one. In a more advanced version, the LAs are akin to a borrower’s financial advisor, looking after their interests, fetching the best offers and advising the customer to make good decisions.

In the longer run, it is envisioned that many more LAs (with apps) will be created. Each of them would focus on distinct borrower pools and build the specialized experiences suited to their customers. This would allow lenders to focus purely on their underwriting and collections logic and cater to diverse collaborations with the LAs.

OCEN 4.0

The OCEN model has been built incrementally in phases, with reinforced learnings from each of the previous pilots. The goal for OCEN 4.0 is to build an ecosystem of participants that creates a Cambrian explosion of cash-flow based loan products across different MSME sectors and different types of borrowers. 

Participant Roles

OCEN 4.0 supports specialized roles for the participants. The purpose of introducing new roles is that it promotes specialization and enhances system efficiency. For example, by establishing a local network of participants, the burden on lenders is reduced, resulting in increased credit accessibility in underprivileged areas.

Role Description
Lender Lenders are the regulated entity that create and own the credit products. They work with other participants as part of a Product Network to serve the Borrower. The Loan-agent understands the borrowers’ credit requirements and works with the lenders to create the product.
Loan-Agent (LA) Agent of the borrower who will help the Borrower to pick up the best loan offer. The Borrowers agent will charge the Borrower a fee for helping them select the best loan. Loan agent is a more inclusive term that encompasses both Borrower Agent (BA) and Lender Service Provider (LSP), spanning across the existing DLG model referred to as LSP and the emerging model in which BA operates as the borrower agent.
Derived Data Partner (DDP) A derived data provider is a collaborating partner within the network that furnishes supplementary data to the Lender, aiding in enhancing their underwriting engine with additional information.
Collections Partner (CP) A Collections Partner is a network-affiliated collaborator designated by the Loan Agent (LA) to aid in the collection process. The lender retains the option to either opt for the Collections Partner or continue using their existing collection procedures.
Disbursement Partner (DP) A Disbursement Partner (DP) is responsible for supporting Purpose Controlled products. This partner will establish integration with suppliers, retrieve their catalog, and facilitate seamless direct payments to suppliers within the OCEN journey.
KYC Partner A KYC partner is a collaborator selected by the Loan Agent (LA). This partner can be engaged for Assisted KYC or any technology-related specialization available on the network. The lender retains the choice to employ the KYC partner within the network or continue with their existing procedures.

In addition to the participant roles above, OCEN framework also relies on Account Aggregator and Credit Guarantees (CGTMSE) as part of the loan journey.

Participant Onboarding

All participants are onboarded to OCEN 4.0 via the participant registry. A standard onboarding process is followed for all participants, and their verification is guaranteed by SROs to ensure that new members receive an equivalent level of trust within the network.

Product and Product Network onboarding

Lender will create & manage the Product and the Loan Agent will create & manage the Product Network to serve that product. All participants in OCEN 4.0 can browse the Products and Product Networks on the Product Registry and subscribe to serve a Product via the Product Networks.

Product Networks

OCEN 4.0 enables a network of product networks that participants can discover, collaborate and serve products to borrowers. See sample example below:

  1. Network begins with Product Network 1
    • Created by Loan Agent 1 who onboards as network participants – 3 lenders, disbursement partner, collections partner and a derived data partner
    • Loan agent 1 can serve their borrowers other products as well.
  2. Network expands with Product Network 2
    • Created by Loan Agent 1 who onboards as network participants – 2 new lenders, the same disbursement partner, and a new derived data partner
    • Loan agent 1 can continue to serve their borrowers other products as well.
  3. Network expands with Product Network 3
    • Created by Loan Agent 1 who onboards existing participants and a new lender (Lender 6) to serve the product
    • Participants can discover products and join the product network
  4. Network expands with Product Network 4
    • Created by a new LA, Loan Agent 2, who onboards existing and new participants to serve the product to their borrowers

OCEN Examples:

GeM SAHAY​

GeM is a short form of one stop, ‘Government e-Marketplace’ where common user goods and services can be procured by various Ministries and agencies of the Government. Government e Marketplace (GeM) offers both products and services as part of its offerings to its registered buyers. GeM facilitates the procurement of a spectrum of Product and Service categories in a way to facilitate Buyer in ease of selection and procurement. GeM SAHAY is an online platform built on the OCEN protocol that provides loans against Purchase Orders to the sellers. 

GeM SAHAY is the pilot project on OCEN to validate the idea of cash-flow based lending for MSMEs. In this pilot, GeM (Government e-Marketplace) is the Loan Agent. The Lenders onboarded onto the pilot offer loans to MSMEs on the GeM portal against government purchase orders. The pilot validates that short-tenure, small-ticket size loans enabled via the OCEN network works for all participating parties.

GeM as a Loan Agent allows the Goods and Service Providers on GeM to apply for Loans against Purchase orders received through various Government buyers on the GeM portal.

GeM as a Loan agent helps onboard borrowers for lenders reducing the acquisition cost for the lenders

GeM being a loan agent also acts as a Derived Data Provider as it carries rich data of the participating MSME borrowers in terms of past number of orders, value of orders executed, quality incidences, completion timelines, etc and these data points help the participating Lenders to underwrite the MSME loan application.

GeM facilitates digital loan process for MSMEs on its GeM SAHAY portal by ensuring integration with multiple lending institutions and helps the Borrower MSMEs to receive multiple offers for its loan applications. Allowing the MSME to choose the best suitable loan offer creates a market shift from Lender’s market to Borrower’s market.

GeM also acts as a Collection partner for the Lending institutions as it helps the lender with repayment of the loan for the purchase order though the Escrow account where the payment for the orders executed is credited by the purchasing entities.

GST SAHAY​

A second pilot that expanded on the above is the GST SAHAY pilot project. This pilot uses GST data to enable working capital loans where SIDBI is acting as the Loan Agent. An additional parameter for validation on this pilot was the inclusion of the Account Aggregator data for loan underwriting.

In GST SAHAY, borrowers can seek loans against unpaid B2B Invoices for supply of Goods and Services to other businesses. Any business registered with GSTN and filing the statutory returns on GSTN can seek financing against Invoices where goods or services are supplied on credit period.

Borrower can register on GST SAHAY application and upload Invoices against which it seeks to avail financing. 

The GST SAHAY application, after seeking the consent of borrower will pull details available from the GST network for its past invoice transactions filed with GSTN, periodic return filings and share the same with Lenders for evaluation and underwriting and credit decisioning.

Similarly, GST SAHAY application after seeking the consent of the borrower will pull details of the Bank statements available from Account Aggregator framework for its past banking data and share the same with Lenders for evaluation and underwriting and credit decisioning.

Lenders will parallelly also check the Credit Bureau of the borrower to assess credit worthiness and past performance on existing credit facilities from other lenders, if available. 

Lending institutions will digitally consume all these data points, along with details available on the Invoice to be financed and by using its proprietary rule engine for underwriting and scoring model, will provide an offer to the borrower for the respective Invoice to be financed.

Borrowers may receive multiple offers (higher loan amount, lesser interest rate, longer tenure) from different Lenders based on their evaluation criteria and will have a choice to select the best suitable offer for seeking the disbursement in a digital way by e-signing the loan agreements, e-Nach / Standing instructions, wherein the amount will be credited to the borrower’s account within few minutes.

There are other OCEN innovative product networks which are at various stages of development and are expected to go live to provide seamless credit to the credit starved MSMEs using OCEN API specifications for communication between the parties (Borrowers, Lenders, Loan Agents and other participants)

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteer, Rahul Bhaik

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Unlocking Growth: The Power of Cash Flow Lending for MSMEs | Expert Insights with Dr. Ravi Modani

In this recent OpenHouse, Sagar Parikh discusses with Dr Ravi Modani how democratizing credit through short-tenor and small-ticket loans can help finance Indian MSMEs, 99% of which are micro-enterprises. Dr Modani shares his insights and invaluable guidance to navigate the complex world of B2B financing for MSMEs.

He also delves deep into the challenges faced by them in accessing financing, particularly in the realm of B2B transactions. Drawing from his extensive experience and research, he offers a fresh perspective on the traditional lending landscape and presents innovative solutions to empower MSMEs.

Key Insights from the Video:

  1. The MSME Financing Dilemma: Dr. Modani highlights the significant hurdles that MSMEs encounter when seeking short-tenor and small-ticket loans. He emphasizes the need for a paradigm shift in lending practices to better serve the unique needs of these businesses.
  2. A New Way Of Financing for MSMEs: Dr. Modani advocates for a pioneering financing approach for MSMEs, highlighting the effectiveness of short-tenor and small-ticket loans. These loans, being revolving in nature throughout the year, allow lenders to disburse a higher volume of loans. Consequently, lenders can potentially amplify their AUM by up to 8 times, surpassing the typical 5-6 times AUM ratio associated with traditional lending practices.
  3. Comparing Financial Platforms: Dr. Modani provides a comprehensive comparison between TReDs and OCEN, offering insights into the advantages of leveraging public networks like OCEN for enhanced interoperability and accessibility.
  4. The Power of Public Networks: Leveraging platforms like OCEN and GeM can significantly reduce operational costs for lenders, ultimately leading to lower lending costs and improved efficiency. Dr. Modani illustrates how these public networks can drive down the cost of lending, benefiting both lenders and borrowers alike.
  5. The Time Sensitivity of MSME Financing: Dr. Modani underscores the time-critical nature of MSME lending and stresses the importance of streamlining the loan journey to ensure timely access to funds for businesses.

His illustrations and learnings help in navigating the complex world of MSME financing by embracing innovative approaches. He believes that leveraging public networks like OCEN will only help lenders unlock new growth and success in today’s lending landscape by opening multifold opportunities to them.

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

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Unlocking MSME Growth: Interoperable Networks & FinTech Insights with Bhavik Vasa

In our most recent OpenHouse, we embark on an insightful exploration of the transformative landscape in MSME lending, featuring Bhavik Vasa, the Founder of GetVantage, and Sagar Parikh. The conversation delves into the potential of creating groundbreaking impact through interoperable networks, particularly focusing on OCEN. The discussion navigates the dynamic intersection of finance and technology, highlighting how inventive solutions are reshaping the lending panorama. Emphasizing the crucial role of interoperability, the dialogue underscores its significance in bridging the credit gap, propelling the MSME sector into a new era of unprecedented growth.

Key Takeaways:

Network Effects Unleashed: OCEN catalyzes network effects, narrowing the credit gap and expanding the market, fostering inclusivity and vibrancy.

Efficiency through Interoperability: Standardized protocols cut costs and efforts, providing high-quality data for lenders while empowering MSMEs with smoother access to loans.

Addressing Unmet Needs: Explore how interoperable networks bridge gaps in unsecured lending, catering to shorter tenures and smaller loan sizes.

Tech-Enabled Business Growth: Witness the role of unsecured lending in a tech-driven landscape, fostering a circular consumption economy for economic growth.

Personalized FinTech Solutions: Bhavik advocates for a borrower-centric approach, urging lenders to view lending through a tech and data-driven lens, benefiting both parties.

Collaboration Dynamics: Conclude with insights on how NBFCs and banks can coexist and collaborate, playing to their strengths for a more robust lending environment.

Ready to unlock the future of MSME lending? Join the conversation now!

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

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Role of Intermediaries & FinTech in MSME lending ecosystem: A conversation with Lizzie Chapman

Intermediaries and Fintechs have played an important role in the lending ecosystem, but the impact is mostly seen in consumer lending and not so much in MSME lending, especially for unsecured, small ticket and short duration loans. What are the missing pieces in the lending process for which advanced tech and a mindset shift can utilise a digital infrastructure like OCEN (Open Credit Enablement Network) and unlock this credit supply for MSMEs?

Recently, we hosted Lizzie Chapman in an insightful conversation with Sagar Parikh. She shared her views on where the intermediaries and FinTechs can further become a value add in a profitable manner by pushing the boundaries of technology.

Points discussed:

  • Digital infrastructure & its impact on the costs, penetration & process for lending eco-system
  • Unsecured MSME loans not as solved as unsecured consumer loans. Cashflow lending addresses the concerns around unsecured lending to MSMEs.
  • DPI such as OCEN facilitating the availability, quality, aggregation of data for credit underwriting along with loan disbursement for MSMEs
  • Need for Intermediaries & Fintechs to harness technology to conceptualise innovative lending products, advanced ways of pricing and matching risks & address the opex challenges in collections & repayments
  • Investors tend to prefer businesses that touch the customer end to end. They should see that being part of the value chain can be as profitable as owning the value chain.
  • OCEN is creating dispute resolution mechanisms but intermediaries should also innovate for transparency and building trust with the customers so as to enable a safe, stable, secure growth in short term cashflow lending for MSME credit.

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Muskaan Sharma

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Unveiling the Future of Lending: A Conversation with Shachindra Nath from UGro Capital

In an era of evolving financial landscapes, the realm of lending is witnessing a significant shift—from the traditional collateral-based approach to the more contemporary cash flow lending model facilitated by OCEN (Open Credit Enablement Network). Recently, we hosted UGro Capital in an insightful conversation with Shachindra Nath, shedding light on this transformative paradigm in lending and delving into its profound implications.

Points discussed:

  • Transitioning from Collateral to Cash Flow Lending
  • Exploring Market Potential
  • Challenges in Seamless Digital Lending

For more information, please visit: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteer, Sagar Parikh 

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Beyond the clutter: How OCEN is unlocking MSME credit market in India

Introduction

OCEN plays a pivotal role in revolutionising MSME lending in India. This innovative open network is specifically designed to serve those new to credit, employing an omni-channel approach that democratises and simplifies access to lending.

Currently, the market lacks a scalable and profitable model for short-term, low-value MSME loans – a significant gap that OCEN has adeptly filled with its GeM-SAHAY pilots.

Amidst the confusion and excitement surrounding OCEN versus ONDC, and the broader impact of open networks in the lending sphere, this blog aims to provide clarity and insight. Let’s dive in and explore these transformative developments.

🔀 OCEN or ONDC: Which is better for short tenure MSME lending?

There’s much debate about which lending framework potential partners should explore. Rahul Mathur (Associate Director, InsuranceDekho) captures this perfectly in his tweet, presented as a checklist below:

🗣️ “Turns out, the focus in lending for ONDC v/s OCEN is very different (see the image below)
(1) 💰Type of loan: Type 1 personal loan v/s Type 4 MSME loan
(2) 🔎GTM: Online v/s Omni-channel (assisted)
(3) 🙇Persona: Eligible for credit v/s New to credit
(4) 🌟Objective: Bring credit to point of commerce v/s Democratize credit access

To summarize, there are some good reasons why ONDC has launched loans independently of the OCEN network.
Over time, OCEN will expand to include further lending use-cases & products. And, at that point, ONDC <> OCEN interoperability would make sense.”

You can find the original post here

Clearly, OCEN is the undisputed option for short tenure, low ticket size lending for new to credit MSMEs. Over time the lending use cases will be expanded to service the traditional form of loans.

OCEN and ONDC, while both operating in the lending space, are tailored for very different use cases and audiences. While they may overlap in some cases, the larger ecosystem benefits from introduction of newer networks. In the end, it’s all about solving the most challenging problems 🙂

Let’s further understand how OCEN addresses the MSME lending problem in India.

📈 OCEN makes small ticket size lending a reality

OCEN’s primary goal is to make short-term lending profitable. Something which we’ve achieved in our pilots with the Government e-Marketplace, through the GeM-SAHAY app.

One of our volunteers explains the economics in this blog post: Evaluating the short term lending opportunity, where he shows how lenders can earn 2.2x higher revenue with the same capital through the adoption of the OCEN framework.

The significant 2.2x increase in revenue is attributed to the introduction of a crucial role known as the borrower’s agent. These agents not only reduce the cost of servicing a loan but also heighten accountability within the system.

Borrower’s Agents (BAs) assume a variety of roles traditionally outsourced by lenders, BAs function as data providers, collections agents, escrow account managers, and product providers.

By integrating these services and cohesively binding the network, BAs enable lenders to efficiently service low-cost loans even in remote areas. In performing these four key roles, the borrower’s agent emerges as the cornerstone of the open network, vital for its effective operation.

The role of borrower’s agent has been discussed in depth in one of our open house sessions:

OCEN is changing the game by making even the tiniest loans worthwhile for both the lender and the borrower.

🌐 Efficacy of Open networks and streamlining the lending process

Some people we’ve spoken to, worry that open networks will lead to the commodification of lending, which, in turn, is bad for the overall market. However, this couldn’t be farther from the truth 🙂.

OCEN streamlines the lending process by introducing roles such as the borrower’s agent, KYC agents, and collection partners. These roles combine to create a bundle that lenders can easily integrate into their processes to start lending.

Newer and smaller lenders will benefit from the transparency and scale offered by open networks.

Closed network auctions, which are common today, see lenders bidding down for loans. However, their lack of transparency and scale often results in low profitability.

Open networks, on the other hand, provide scale and transparency that leads to low cost of servicing, more borrowers to choose from, and reliability in the system through a borrower’s agent.

Larger lenders benefit from the low cost of servicing a loan that comes with open networks

Larger lenders will benefit from open networks as it provides the technical chops of a borrower’s agent. BAs can help with KYC, collections and other parts of servicing a loan while absorbing some of the costs.

We’ve seen such effects before, with the introduction of Aadhaar and UPI, where KYC and collections became far cheaper enabling large lenders to facilitate smaller ticket size loans.

In conclusion

Through OCEN, the potential to unlock a ~$300 billion credit market in India becomes a tangible reality. This is demonstrated by the increased revenue potential and the introduction of the borrower’s agent role, enhancing loan servicing efficiency and accountability.

Moreover, OCEN’s streamlined lending process benefits the entire market, by offering scalability and cost-effectiveness to both emerging and established lenders.

Thus, embracing OCEN is not just a choice but a strategic direction for expanding market possibilities and empowering both lenders and borrowers in the dynamic credit landscape of India.

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OCEN 4.0 : Intro to Lenders Openhouse #11

📢Calling all lenders to understand how a short tenor loan can become both an effective and profitable business opportunity under OCEN 4.0. 🔑📈

If you are a lender looking for the next big opportunity in lending to the thousands of MSMEs currently unable to access loans, then don’t miss this introduction to OCEN 4.0. 💡

Here we deep-dive into how a new underwriting model enabled by OCEN 4.0 makes it viable and profitable to provide loans to MSMEs traditionally considered unfavourable candidates for loans given the associated high delinquency rates.
Our OCEN pilots show, in some cases, it is even possible to create short tenor loans that are twice as profitable as long tenor loans. 🌟🚀🚀

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Sagar Parikh and Rahul Bhaik

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OCEN 4.0: Intro to Borrowers Agent Openhouse 10

📢Calling all loan agents keen to understand the OCEN 4.0 business opportunity. 🔑📈

OCEN 4.0  introduces a new and powerful role – the Borrowers Agent(BA). If you are looking to play a pivotal role in the MSME lending ecosystem without lending from your own balance sheet, this new role of a BA may be what you want to understand really well. 💡

The BA role is critical to the OCEN story. In this session, we deep-dive on what this role entails, why it is the linchpin of the OCEN 4.0 model, how BAs enable lenders to go remote, and how this role wields a lot of power. We also talk through how to get started, possible business models for BAs and what to focus on to be a successful Borrowers Agent. 🌟🚀🚀

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Wribhu Tyagi and Aravind R.

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OCEN 4.0 : Tech deep-dive Openhouse #9

📢👷🧑‍💻Calling all TSPs and participants eager to dive into OCEN 4.0 APIs. 

If you are wanting to understand the tech, the APIs and get started on building for OCEN 4.0, our second open house on OCEN 4.0 is here for you !! 💡

In this session, we do a deep-dive on the architecture, the loan journey on OCEN 4.0 components, the APIs in the OCEN spec and share how you can build for a participant by mocking the APIs of the other. 📝🔑🧑‍💻

OCEN Documentation: http://ocen.dev

❓Questions? Submit your questions here.
📩Contact? Reach the OCEN 4.0 team at [email protected]

Please note: The blog post is authored by our volunteers, Aravind R and Sagar Parikh.

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Bridging the Connectivity Gap: Unraveling the Challenges and Solutions for PM-WANI

The Pradhan Mantri Wifi Access Network Interface (PM WANI) was launched in December 2020. It received a great initial reception, but the enthusiasm died over time. Several reasons have been cited, including a lack of a vibrant ecosystem, lack of profitability, limited business models, etc. In addition, a belief also crept up over time that India did not need PM-WANI as existing telcos would step in and provide universal connectivity in the country. At the same time, several stand-alone solutions have been provided from various quarters to jumpstart the ecosystem. 

iSPIRT has taken a long hard look at PM-WANI. It has identified the causes for the multiple issues plaguing the system and attempted to solve the problem holistically. This Open House Session presents our analysis of the issues in PM-WANI and a path forward. It argues for an integrative approach, considering all stakeholders’ concerns. We believe that PM-WANI can fulfil its mission of providing universal connectivity to a large unconnected part of our population.

Latest Open House

The blog post is co-authored by iSPIRT Volunteers, Prof. Nilesh Gupta, Saurabh Chakrabarti, Bhuvan Beejawat, Prof. Himanshu Tyagi, and Sharad Sharma.

P.S: Prof. Nilesh Gupta and Prof. Himanshu Tyagi are faculty members at the Indian Institute of Management Nagpur and Indian Institute of Science, respectively, and they also represent their views as independent researchers on the topic.

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Economic Transformation through AI: Key pillar to a large Indian Economy in Global Top 3

In the rapidly evolving landscape of the AI economy, the choices made today will reverberate for generations. As custodians of India’s future, we must recognize the urgency of embracing AI as a lynchpin of economic growth. The time to act is now!

In an era characterized by relentless technological advancement, a nation’s economic growth trajectory hinges on its ability to harness the power of artificial intelligence (AI). Goldman Sachs reported that generative AI could raise global GDP by 7%. By 2030, this AI driven Intelligence Economy might add $15.7tn of new economic value as per PWC research.

With its burgeoning tech industry, diverse and large data pool and remarkable human capital, India stands at the precipice of an economic transformation that could either propel it to global leadership or condemn it to follow in the wake of other trailblazers. As political decision-makers, the imperative to recognize and seize this opportunity cannot be overstated in view of India’s bid to become one of the top 3 economies of the world. The availability of the DEPA Training Cycle and the DPDP Bill passage through the Parliament open the door to immediate and strategic action via the creation of a large AI economy.

I. The AI Imperative for Global Competitiveness:

India’s demographic dividend of 900mn+ people is no secret but must be coupled with technological prowess to ensure a multiplier effect for sustained growth. As global economies increasingly pivot towards AI-driven industries, overlooking this shift risks consigning India to a secondary role on the global stage. To maintain competitiveness, India must embrace AI not merely as a tool but as the very foundation of its economic strategy going forward. It must ensure that it is not just a consumer of AI but a critical creator of AI. In fact, it must aim to emerge as one of the 3 AI superpowers in the world.

II. Safe AI Leadership Depends on Data

India’s DEPA Training makes privacy-preserving collaboration between Training Dataset Providers and Modelers (called Training Dataset Consumers) possible at a large scale, which is a critical element in AI journey. The DEPA system does not rely on hard-to-implement enforcement of legal covenants around Anonymized Datasets, as is the case in countries like the US, where AI companies are fighting constant litigation. Instead, it depends on computational privacy guarantees in the use of aggregated datasets. This is core to enabling safe AI systems, built with reliable and traceable access to datasets. Then, it can be deployed quickly with human alignment that India can provide with its billion plus users. As India begins to unlock continental-scale datasets using this system, it will give rise to a vibrant ecosystem of AI Modelers. This dataset advantage in AI is not to be underestimated. By focusing on early Safe AI adoption, India can secure a foothold in these sectors, attracting global investment and cementing its position as an innovation hub whose AI innovations would be adopted by societies around the world.

III. Addressing Socioeconomic Disparities: Remote AI driven workflows & 5G

Harnessing AI’s potential can also serve as a powerful tool to address India’s socioeconomic disparities. AI-driven solutions can optimize resource allocation, improve public service delivery, reduce cost of access and create job opportunities across urban and rural areas. With massive 5G rollout, the possibility of digital global work aided by AI is here. It can dramatically bring income opportunity to rural and smaller cities, if we can bring in Indic language AI tools, which lower the bar for participating in the global workflows. By proactively leveraging AI to bridge gaps and enhance productivity, India’s leadership can demonstrate a commitment to inclusive growth and lay the foundation for a more equitable society. All the while reducing strains of growing urbanization, which might be disastrous for its overburdened large cities.

IV. The Gameplan for AI Leadership: Missing piece of compute clusters

DEPA Training will safely and responsibly unlock the collaboration between India Training Dataset Providers and Modelers. We have the talent already and the market scale to do Reinforcement Learning with Humans in the Loop. What we lack is tensor-scale computing enabled for Industry, startups, academia and Govt itself. The Government of India must address this by enabling the creation of many, not one, tensor-scale GPU cloud providers. There are many ways to do this: Challenge Grants, Viability-gap funding for cloud providers, and Matching-grants for Modelers. We favor the Matching Grants method for effectiveness, transparency, and competition. In addition, we must seek to create AI on the edge compute ecosystem for a strategic future.

V. Collaborative Diplomacy and Global Alliances:

AI does not recognize national borders, and collaboration is key to advancing the field. At the same time, we must recognize that Nvidia H100 boards are already on the US Export Control List for China. The US might leverage its muscle further at some time in the future. We must therefore have a strategic perspective in making our aggregate AI capability and datasets available to others based on a principle of reciprocity. We must build careful alliances with a broad set of players in US, EU and Asia that will accelerate India’s AI capabilities but also position the nation as a global AI thought leader.

VI. The Consequences of Inaction:

The consequences of neglecting AI’s potential are dire. India risks becoming a mere consumer of AI technologies, ceding economic leadership to countries that have embraced AI as a strategic priority. China, our neighbor, has famously vowed to be the sole AI superpower by 2030. This passivity could lead to missed opportunities, economic stagnation, and a loss of global influence. It may even result in India failing to breach the top 3 economies, , as we might have to buy both oil and artificial brains, draining our resources for welfare schemes for our large population. That could risk demographic disaster instead of demographic dividend.

Conclusion: We need to act now!

In the rapidly evolving landscape of the AI economy, the choices made today will reverberate for generations. As custodians of India’s future, we must recognize the urgency of embracing AI as a lynchpin of economic growth. The time to act is now! We must catalyze innovation, ensure global competitiveness, and create a prosperous future where India’s leadership is defined not by its past but by its capacity to shape the AI-powered future world decisively.

Sharad Sherma is co-founder of iSPIRT Foundation. Umankant Soni is the Chairman AI foundry, General Partner ART Venture Fund.

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iSPIRT’s response to Union Budget 2023

Budget 2023 – Digital Public Infrastructure (DPI) the ‘Mantra’ for New India

iSPIRT Foundation, a technology think-and-do tank, believes that India’s hard problems can be solved only by leveraging public technology for private innovation. iSPIRT as a think tank pioneered the Digital Public infrastructure (DPIs)

India is at the cusp of what could be the most exciting quarter century of its post-independence existence, referred to as ‘Amrit Kaal’ by the Economic Survey yesterday and today in the Budget speech. The Economic Survey also mentioned that GDP could be boosted by 1% by Digital Public Infrastructure (DPIs), where India is stealing a March on the world for sure. 

The second testimony to the important contribution of DPIs to the economy comes in the budget speech today when the finance minister stated, “India’s rising global profile is because of several accomplishments: unique world class digital public infrastructure, e.g., Aadhaar, Co-Win and UPI” in the forefront. 

Development of DPIs, Stay-in-India Checklist (for Ease of Doing business of Startups), and a ‘jugalbandi’ between public technology and private innovation, through techno-legal regulations, are central to iSPIRT’s work in an attempt to build Product Nation. 

The union budget 2023, brings in cheer to see attempts on the following:

  • Digital Public Infrastructure: The resolve to deepen the DPI and the belief in their role in economic growth. India Stack to build the DPIs has become central to the thought process. Taking the queue ahead the budget 2023 announced the development of DPI for Agriculture, which will be an open source, OpenAPI digital public good, to build inclusive farmer-centric solutions, credit & insurance, farm inputs market intelligence. An Agriculture Accelerator Fund has been announced to promote Agritech start-ups.
  1. Vigyan Infrastructure: efforts to boost R&D, though limited to some sectors right now. Notable among these are – It encourages private sector R&D teams for encouraging collaborative research and innovation in select ICMR labs in the PPP model
  2. One hundred labs for developing applications using 5G services will be set up in engineering institutions. 
  3. Center of Excellence for AI for “Make AI in India and Make AI work for India
  • MSMEs funding & growth is part of the budget thought process, which may lead to the use of another DPI called Open Credit Enablement Networks (OCEN) for enabling MSME funding.
  • The importance of Ease of doing business is reflected in some announcements like using PAN as a Common digital identifier and entity DigiLocker for MSMEs.
  • Wanting to keep the startup revolution going is reflected in the intent to use Startups to build technology in multiple sectors and also use the policy for a new India.

However, beneath all the euphoria, some chronic issues remained to be addressed. The disappointment is on the Stay-in-India checklist (a list of Ease of doing business issues for Startups) to stop startups from slipping from India, which has not been addressed. The checklist is being continuously pursued by iSPIRT and is much needed to provide a competitive edge for India to refrain startups from leaving her jurisdiction.  

Overall it’s heartening to see the vision statement in budget, “Our vision for the Amrit Kaal includes technology-driven and knowledge-based economy”.   

About iSPIRT Foundation – We are a non-profit think-and-do tank that builds public goods for Indian product startups to thrive and grow. iSPIRT aims to do for Indian startups what DARPA or Stanford did in Silicon Valley. iSPIRT builds four types of public goods – technology building blocks (aka India stack), startup-friendly policies, market access programs like M&A Connect and Playbooks that codify scarce tacit knowledge for product entrepreneurs of India.

For more, visit www.ispirt.in.For further queries, reach out to Email:  [email protected] or [email protected].

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RBI Rationalized Reporting Process for Foreign Direct Investment (FDI)

iSPIRT is pursuing the Stay-in-India Checklist 2.0 with Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, targeted to bring Ease of Doing Business for start-ups.

Our efforts gained momentum with DPIIT’s Regulatory Roundtables since August 2022. Reserve Bank of India has further eased the reporting of FDI on the FIRMS portal.  The item was on the list of issues that were taken up with RBI through DPIIT.

The new announcement called “Foreign Investment in India – Rationalisation of Reporting” has been announced vide circular no. RBI/2022-23/160 A.P. (DIR Series) Circular No. 22 Dated January 04, 2023. Please visit the RBI site on linked here.

The announcement is expected to further ease the reporting of the foreign direct investment received.

Details of the Reform Measure

In its effort to tout India as an attractive investment destination, the Reserve Bank of India (RBI) has released the RBI/2022-23/160 A.P. (DIR Series) Circular No. 22 on 4 January 2023, which brings about certain reforms in the reporting process in the Single Master Form (SMF) on the FIRMS portal. The SMF is a form which integrates the reporting structure of various types of foreign investment in India. It has implemented the following changes with respect to reporting in the SMF on the FIRMS portal:

  • The forms submitted on the portal will now be auto-acknowledged with a time stamp and an auto-generated email will be sent to the applicant. The AD banks will have to verify the same within 5 (five) working days based on the documents uploaded.
  • The system would automatically identify a delay in reporting if any.
  • For forms filed with a delay of less than or equal to 3 (three) years, the AD bank will approve the same, subject to the payment of LSF.
  • The LSF will be computed by the system, and an e-mail will be sent to the applicant and the concerned Regional Office (RO) of the RBI, specifying the amount and the timeline within which the LSF is to be paid to the concerned RO.
  • Once the LSF amount is realised, the concerned RO will update the status in the FIRMS portal, and the updated status will be communicated to the applicant through a system-generated e-mail, which can also be viewed in the FIRMS portal.
  • The AD bank will approve the forms filed with a delay greater than three years, subject to the compounding of the contravention. The applicant may thereafter approach the RBI with their application for compounding.
  • The remarks of the AD Bank for rejection of forms, if any, will be communicated to the applicant through a system-generated e-mail and the same can also be viewed in the FIRMS portal.

The resulting effects of the RBI circular

1.   Auto acknowledgement of SMF

While the rationalisation of the reporting process is a welcome move, and the auto acknowledgement of forms will bring comfort to the applicants after filing the form, we are receiving mixed reactions from stakeholders with regard to the verification of the forms submitted by the applicants within the 5 (five) working day window. Given that there are no overarching guidelines on the format of documents required for filing Form FC-GPR and Form FC-TRS, and the format differs from bank to bank, it may be helpful if banks were to consider offering pre-vetting services in relation to reporting for cross-border transactions.

The likely result of an AD bank not approving the form within 5 days will be auto-approval of the form.

The circular is silent on what happens in the event an authorised dealer (Bank) isn’t satisfied with the details. It seems, in such an event, what could have been approved with a few follow-up queries will have to be rejected within the 5-day window, if the queries remain unanswered.

Separately, we also believe that a 5-day window is very short given the complexity that can arise with some filings. Banks and their regulatory teams also usually work only till 5:00 PM (and cannot, in any case, be expected to work 24×7), so if a form is submitted close to or after 5:00 PM, an applicant may already have lost close to a day.

2.   Online calculation of late submission fee.

Auto-identification of a delay in reporting and calculation of the late submission fee (LSF) by the system will likely be greatly appreciated by stakeholders. Prior to this reform, if an applicant received an email from the RBI regarding the LSF, the applicant would have to draw a demand draft in favour of the RBI, which would have to be acknowledged by the RBI through email. While the process was efficient and hasn’t changed post the amendment, there have been multiple instances of applicants not having a record of the acknowledgement with them after a few years, either due to: (a) IT policies of the organisation which delete older emails; or (b) due to a change in employees. Now that the concerned RO of the RBI will update the status on the FIRM’s portal (along with the standard email process), the amount will be reconciled and the LSF can be viewed on the portal.

Disclaimer: This blog post is co-written by Tanuvi Thakur of iSPIRT and Sanjay Khan of Khaitan & Co and is meant to inform about a new announcement by the regulator. It should not be considered as advice.

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#3 What does the Health Stack mean for you?

The National Health Stack is a set of foundational building blocks which will be built as shared digital infrastructure, usable by both public sector and private sector players. In our third post on the Health Stack (the first two can be found here and here), we explain how it can be leveraged to build solutions that benefit different stakeholders in the ecosystem.

Healthcare Providers

  • Faster settlement of claims: Especially in cases of social insurance schemes, delay in settlement of claims causes significant cash-flow issues for healthcare providers, impacting their day-to-day operations. The claims and coverage platform of the health stack is meant to alleviate this problem through better fraud detection and faster adjudication of claims by insurers.
  • Easier empanelment: The role of facility and provider registry is to act as verified sources of truth for different purposes. This means a convenient, one-step process for providers when empanelling for different insurance schemes or providers.
  • Quality of care: The use of personal health records can enable better clinical decision making, remote caregiving and second opinions for both patients and medical professionals.

Insurers

  • Faster and cheaper settlement of claims: claims and coverage platform, as described above
  • Easier empanelment of healthcare providers: registries, as described above
  • Diverse insurance policies: In addition to the above benefits, the policy engine of the healthstack also seeks to empower regulators with tools to experiment with different types of policies and identify the most optimum ones

Researchers and Policymakers

  • Epidemiology: the analytics engine of the healthstack can be helpful in identifying disease incidence, treatment outcomes as well as performance evaluation of medical professionals and facilities
  • Clinical trials: a combined use of analytics and PHR can help in identifying requirements and potential participants, and then carrying out randomised controlled trials

How can it be leveraged?

While the healthstack provides the underlying infrastructure, its vision can be achieved only if products benefitting the end consumer are built using the stack. This means building solutions like remote second opinions using health data from healthcare systems, as well as developing standard interfaces that allow existing systems to share this data. In the diagram below, we elaborate on potential components of both of these layers to explain where innovators can pitch in.

If you are building solutions using the health stack, please reach out to me at [email protected]!

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White Paper On The Analysis Of High Share Premium Amongst Startups In India

“High share premium is not the basis of a high valuation but the outcome of valid business decisions. This new whitepaper by our iSPIRT policy experts highlights how share premia is a consequence of valid business decisions, why 56(2)(viib) is only for unaccounted funds and measures to prevent valid companies from being aggrieved by it”