The OCEN Framework has undergone an incremental change with the OCEN 4.0 being unveiled in August this year.
Key Takeaways
- A Products Registry introduced.
- Lenders can create products and collaborate with Loan Agents in the Products Network.
- Further specialisation of participant roles to decrease the burden on lenders.
- The new Products Registry to be maintained by Self-Regulating Organisations (SROs).
The Open Credit Enablement Network, or OCEN has come out with its new version- OCEN 4.0
Developed by the think-tank iSpirit, the OCEN network is part of the India Stack that aims to digitalise the economy by providing open protocols and frameworks as Public Digital Infrastructure.
Launched in 2020, OCEN seeks to democratise formal lending by reducing the barriers to entry and using data to enhance the underwriting process. It works in tandem with other digital public goods, such as Aaadhar/e-KYC, the Account Aggregator Framework, UPI, and Digilocker, inter alia.
What are the key changes in the OCEN 4.0?
As published on the official website of the framework, OCEN 4.0 has the following key changes when compared with earlier versions:
1. The network has introduced more participant roles for further specialisation within the framework, which in turn would also make the framework more accessible to the laity.
Thus, local networks of participants are introduced in the revision for e-KYC, data processing, collections, etc. to reduce the burden on lenders.
2. Introduction of separate registries for participants and products, to be maintained by Self-Regulating Organisations (SROs).
3. Introduction of a Product Network, which would allow multiple participants in the framework to collaborate for marketing any of the specified products in the Products Registry to the borrower through Loan Agents.
4. To enable accessibility to the newly introduced Products Registry and easier access to the Products Network for collaboration, the OCEN 4.0 APIs are standardised for interoperability.
How can OCEN 4.0 benefit the borrowers?
To understand how OCEN 4.0 could benefit the borrower, it is important to understand how the new additions in the revised version would work-
The newly added Products Registry can be accessed by all the participants of the network.
The Products Registry includes the Products created by the lenders on the network, and a Products Network managed by the Loan Agents.
The Lenders and the Loan Agents can collaborate within the Products Network, which would allow lenders to create products addressing customised needs of the borrowers derived from the data accessed by the Loan Agents.
In this respect, Loan Agents would be better able to serve their mandate of being the agent of the borrower.
The customisation from more insights would allow for more small-ticket and shorter-tenor loans for MSMEs.
The further specialisation of roles in the new version would reduce the cost of borrowing, benefitting the new-to-credit customers which are poised to drive the demand in the MSME segment.
