The convergence of artificial intelligence (AI) and Open Credit Enablement Network (OCEN)-powered borrower agents is revolutionizing India’s financing landscape, especially for Micro, Small, and Medium Enterprises (MSMEs) and Priority Sector Lending (PSL). This integration is paving the way for accelerated digital B2B financing, enabling Public Sector Banks (PSBs) and Financial Institutions (FIs) to extend loans ranging from INR 25 lakh to INR 5 crore more efficiently and inclusively.
About OCEN
The Open Credit Enablement Network (OCEN, pronounced O-ken) is a framework of open APIs designed to streamline the lending ecosystem in India. It establishes a standardized protocol for collaboration between lenders and digital platforms, referred to as Loan Agents (LAs) (formerly known as Loan Service Providers (LSPs) in OCEN terminology).
The convergence of artificial intelligence (AI) and Open Credit Enablement Network (OCEN)-powered borrower agents is revolutionizing India’s financing landscape, especially for Micro, Small, and Medium Enterprises (MSMEs) and Priority Sector Lending (PSL). This integration is paving the way for accelerated digital B2B financing, enabling Public Sector Banks (PSBs) and Financial Institutions (FIs) to extend loans ranging from INR 25 lakh to INR 5 crore more efficiently and inclusively.
OCEN 4.0 was launched as part of IndiaStack to bridge India’s credit gap, particularly for MSMEs. By enabling digital platforms to seamlessly integrate credit services, OCEN is reshaping the distribution of financial products and making formal credit more accessible through new, embedded touchpoints.
The Promise of Embedded B2B Finance
Embedded B2B finance is redefining how businesses access credit. By integrating financial services directly into non-financial platforms, it eliminates traditional barriers to financing for MSMEs, startups, and small businesses. This innovation aligns perfectly with India’s rapidly evolving digital ecosystem, where seamless and user-centric solutions are in high demand.
OCEN acts as the backbone of this transformation. By standardizing credit protocols and enabling real-time data sharing among lenders, technology platforms, and borrower agents, OCEN simplifies access to credit for MSMEs. Borrower agent fintechs play a critical role here, using AI to assess creditworthiness and streamline loan approvals, thereby bridging the gap between MSMEs and institutional funding.
AI-Driven Credit Assessment: A Game-Changer
AI technologies are at the forefront of enhancing the efficiency and accuracy of credit assessment. With advanced machine learning models, AI enables lenders to evaluate a borrower’s financial health based on granular data, such as revenue patterns, transaction histories, and digital footprints.
For MSMEs, which often struggle with limited credit histories or collateral, this approach is transformative. AI-powered solutions not only provide personalized loan offerings but also reduce the time needed to disburse funds. By tailoring products to match a MSME’s cash flow and growth trajectory, AI ensures that financing is both accessible and sustainable.
OCEN-Powered Borrower Agents: Enabling Two-Click Credit
The introduction of borrower agents under OCEN has streamlined credit access, transforming the traditionally cumbersome loan application process. These agents, equipped with AI tools, act as intermediaries, helping MSMEs secure two-click credit.
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For instance, a small manufacturer seeking a working capital loan can leverage platforms integrated with OCEN protocols. By analyzing sales data or payment records in real time, borrower agents can recommend suitable credit options and facilitate instant loan disbursals. This seamless experience empowers MSMEs to focus on scaling their operations without being bogged down by lengthy administrative processes.
The Role of Fintech Innovators
Fintech companies are leading the charge in democratizing access to capital. By leveraging options like revenue-based financing (RBF) models, these companies helps MSMEs secure funds without relying on traditional credit scores. Instead, funding is based on performance metrics, such as revenue growth or transaction volume.
This approach is particularly valuable for digital-first businesses, such as e-commerce retailers or D2C brands.
Driving MSME Growth and Economic Resilience
The integration of AI and OCEN-powered embedded finance solutions has the potential to boost India’s MSME sector fivefold, unlocking untapped economic value. By improving credit access for underserved businesses, these innovations can drive:
- Financial inclusion, enabling even small-town entrepreneurs to access institutional funding.
- Operational agility, allowing MSMEs to invest in technology, inventory, and talent.
- Economic resilience, as businesses are better equipped to weather market uncertainties.
The embedded finance sector in India is projected to grow at a CAGR of 30.4%, reaching $21 billion by 2029. This growth is further accelerated by India’s increasing digital adoption, evidenced by the exponential rise in UPI transactions and the digitization of supply chains.
The Road Ahead
AI-enabled credit assessment and OCEN-powered borrower agents represent a pivotal shift in India’s financial landscape. By addressing long-standing challenges related to credit accessibility and efficiency, these technologies empower MSMEs to scale, compete, and thrive.
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As PSBs and FIs embrace these innovations, the future of digital B2B financing for MSMEs looks promising. By fostering an inclusive ecosystem, India can not only unlock the full potential of its MSME sector but also position itself as a global leader in digital finance.
The time to invest in AI and embedded finance is now—because the growth of MSMEs is the growth of India.
Guest contributor Bhavik Vasa is the Founder of GetVantage/ GetGrowth Capital, a capital gateway and embedded financing platform, reshaping venture finance by facilitating funding for over thousands of SMEs and startups. Any opinions expressed in this article are strictly those of the author.
