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HomeProcurement/Supply Chain ManagementOpen Credit Enablement Network (OCEN) and Its Implications in improving Supply Chain...

Open Credit Enablement Network (OCEN) and Its Implications in improving Supply Chain Finance for MSMEs

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Supply Chain Finance relies on the buyer-supplier relationship and the buyer’s involvement in the financing application. A strong buyer’s creditworthiness adds weight to evaluating suppliers’ credit limits. Suppliers can access financing at a lower price with the buyer’s involvement. Verifying the buyer-supplier relationship is essential to credit assessment. Information technology automates end to end the supply chain finance process, including invoicing, approval, credit assessment, and even final settlement.

By the end of 2023, India’s digital lending business will be more the $350 million. Its market share is predicted to increase to 48% in 2023, up from 23% in 2018. OCEN is meant to address current loan processing issues like verification, data interchange, and other aspects of the lending cycle; lenders should anticipate seeing a fivefold increase in revenue. The Open Credit Enablement Network (OCEN) is a technology framework that enables the seamless exchange of credit-related information between lenders and borrowers. While OCEN primarily focuses on credit enablement, its application can also enhance visibility in financial flow of supply chain, providing greater transparency and efficiency in managing financial transactions within the supply chain.

What Exactly is OCEN?

Only 11% of India’s 63 million MSMEs (Micro Small and Medium Enterprises) have access to formal credit. The rest must turn to non-banking financial companies (NBFCs) or money lenders to obtain money at a hefty interest rate. OCEN will be a digital platform that will solve this problem.

It was first introduced as a part of IndiaStack by Infosys CEO Nandan Nilekani in 2020 and is still a hot topic today. Simply defined, OCEN (open credit enabled network) is an application that intends to bring together loan service providers and lenders to provide MSMEs with easy finance.

It will provide MSMEs with inexpensive credit and that too quickly. It will also provide lenders with the borrower’s consent-based verified public and private information.

Lenders will give the borrower a customized loan based on this data. OCEN is an infrastructure protocol that will connect borrowers and lenders via legitimate data exchange, which will be consent-based, safe, and secure.

Open Credit Enablement Networks (OCEN) function by consolidating and automating the different manual processes involved in a lending value chain, such as the screening of loan-worthy customers, and the onboarding of new borrowers, thus decreasing the total operating time and costs of associated with it and thereby increasing effectiveness.

OCEN is a protocol that allows platforms and markets called LSPs (Loan Service Providers) to link to banks and non-bank lenders to digitize the origination, underwriting, and servicing process of loans. In this context, Open Credit Enablement Network (OCEN) has emerged as a novel lending paradigm and a protocol infrastructure that would help in the facilitation of interoperability between Loan Service Providers (LSPs), like FinTechs and E-commerce players, and traditional lenders, like banks and Non-Bank Financial Companies (NBFCs). The next big opportunity for fintech through this open credit network is for lenders to get willing to interact with LSPs based on a new lending protocol infrastructure.

How does OCEN work?

OCEN is a part of the larger India Stack framework, which includes Aadhaar and UPI as its base. LSPs or digital platforms, (Technology service provider) TSPs or Fintechs, lenders like banks, NBFCs, and other loan providers, as well as borrowers like MSME entrepreneurs who are the end users of the credit, are some of the various stakeholders in the OCEN ecosystem. For each stage of the loan lifecycle, (Application Programming Interface) APIs are provided. It provides an end-to-end digital lending procedure and integrates processes. LSPs, TSPs, and lenders can work together to develop credit choices that are ideal for the customer thanks to this partnership.

Three Ways OCEN Works

  • To borrowers: MSMEs or individual borrowers can check out the credit options available under a secured lending process.
  • To lenders: Banks and NBFCs along with other lenders can provide access and capital to core banking network. The digital access can be a web app or an android app that already has a core offering and a customer base. It will help then build on and grow the business and serve the needs they may have.
  • To loan services: Fintech companies and customers that have digital access can be on the same platform. Lenders can provide customized loan application options while borrowers can access them easily.

Benefits of OCEN in Supply Chain Finance Flow Visibility

  • Enhanced Transparency by providing real-time visibility into financial transactions within the supply chain.
  • Supply chain finance workflow, from invoice processing to financing disbursements, becomes streamlined and automated. This reduces manual efforts, eliminates paper-based processes, and enhances efficiency in managing financial transactions.
  • The real-time reporting and analytics capabilities of OCEN enable faster identification any cash flow gaps, track the status of payments, and take necessary actions to ensure smooth operations within the supply chain.
  • With improved visibility and timely payments through supply chain finance, firms can strengthen its relationships with suppliers.

Here’s an example of how OCEN can be used by MSMEs in improving Supply Chain Finance:

Let us consider an MSME that supplies products to a larger company. Typically, the MSME would issue an invoice to the buyer, indicating the payment terms and due date. However, the MSME may need immediate funds to meet its working capital requirements or invest in business growth.

By leveraging OCEN, the MSME can share relevant invoice data securely with financial institutions that are part of the network. These financial institutions, including banks or non-banking financial companies, can assess the creditworthiness of the MSME and its buyer based on the transaction history and other available data within the network.

After receiving permission, the financial institution can offer the MSME the required finance, such as factoring or invoice discounting. A proportion of the invoice value less a fee or interest charge often represents the financing amount. By doing this, the MSME can access funds before the buyer must make payment, enhancing its cash flow and lowering the possibility of late payments.

The entire process is made more transparent and efficient by OCEN. By submitting invoices and supporting documents digitally, the MSME may quickly cut down on paperwork and manual processing. Using the real-time data provided by OCEN, the financial institution may assess the credit risk and immediately confirm the legitimacy of the invoices.

Additionally, OCEN enables a safe and auditable record of all transactions and communications between the parties. This transparency and traceability reduce the risk of fraud or disputes, benefiting both the MSME and the financial institution.


The Open Credit Enablement Network (OCEN) offers fascinating new opportunities for development and transformation when viewed in the broader context of the fintech industry’s explosive rise in India. In plainer terms, OCEN can be thought of as a software architecture that, through APIs and clever integrations, unites the various players in the credit ecosystem under one roof, allowing lenders to create customized lending instruments and companies to streamline their access to the market that houses a wide range of credit products. The Open Credit Enablement Network (OCEN) can enhance supply chain finance flow visibility by integrating financial systems, digitizing invoice and payment information, facilitating credit assessment, and providing real-time reporting and analytics. By leveraging OCEN for supply chain finance, MSMEs can overcome cash flow challenges, access timely funding, and strengthen their business operations. This technology-driven approach streamlines the financing process and fosters collaboration between MSMEs and financial institutions, promoting inclusive growth and supporting the development of the MSME sector. Finally, OCEN gives lenders the opportunity to expand their markets and offer innovative lending products, reducing their acquisition costs.

Read more: Geopolitics & International Relations in Supply Chain Management: Building Supply Chain Resilience Through Global Connections

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Shantanu Trivedi
Shantanu Trivedi
Shantanu Trivedi is working as a faculty at the University of Petroleum and Energy Studies, Dehradun. He holds an MBA and a Ph.D. degree in Supply chain management. He has more than a decade of experience in teaching and research. He has published 2 books, 5 book chapters and more than 12 research papers and articles in international journals of repute. His research interest includes Supply chain management, agribusiness, online and distance education, Business sustainability and infrastructure management. He is the reviewer of many international publishing houses. He has presented his work and won awards at many research conferences and symposiums. He has worked on many research with state governments and the government of India. In his spare time, Shantanu loves to travel and explore nature.
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