Hi,  

Welcome to the 117th edition of The Pattern, a weekly newsletter where we delve into the latest in the world of finance, technology and economy. Let’s get started. 

It’s been a great week for those who've bet high stakes on ONDC. With ~10 million transactions last month, the open network has reached its newest milestone. These numbers, of course, pale in comparison to transactions clocked by e-commerce giants. But here’s why ONDC’s June report stood out to me: 

• Consistent upward trajectory: The platform had less than 5,000 transactions in March last year and closed 2023 with fewer than 3 lakh merchants . Cut to this year, and June has seen a 12% month-on-month growth with 10 million transactions—impressive indeed! At the rate at which these transactions are growing (and the consistency in ONDC’s estimation of its growth), it seems like the network’s aim to clock 30-40 million transactions by 2025 isn’t too off the mark.  

• Boost in retail transactions: Since the launch of Bengaluru’s Namma Yatri, mobility contributed to a major chunk of ONDC’s transaction volume . However, June saw a significant change where retail made up close to 60% (6.01 million) of the transactions, while mobility made up the rest (3.94 million).  

Why is this good news? Because an uptick in transactions – with retail standing out – implies a rise in demand for the ONDC use-case beyond ride hailing. It brings together a large and diverse pool of sellers across industries – restaurants, grocers, FMCG businesses among others – onto one, interoperable platform. To anyone in the finance and tech space, this means lots of data and business (cha-ching)!  

It’s been a while since ONDC phased in financial services on the platform – and we’re yet to see financial institutions leverage it (in a ground-breaking way at least). But as the business on ONDC grows, I’m confident that financial institutions and fintechs will not turn a blind eye to the potential to cash in. In fact, I’d say that it’s happening already! 

This week saw a neobank launch India’s first personal loans product on ONDC. The fintech, which focuses on financial inclusion, aims to reach “the emerging middle class, young professionals, and small entrepreneurs”. The fintech has already set its sights to cater to SMEs too. The targeted customers are a risky cohort, no doubt. But it inched ONDC closer to its ambitious goal of bringing about commerce-inclusion. 

Speaking of ambitions, ONDC seems quite bullish on its growth too. Apart from the ~300 million-transactions-a-month goal, the network is on its way to restructure incentives. Players, especially buyer and seller apps, will soon see up to a 75% slash in ONDC’s discount incentives . A bold move, but I’d like to think that it will have little impact on the growing transactions. I’d even go so far as to speculate that it may push buyer and seller apps to seek other streams of revenue, inviting banks and NBFCs to lend on their platforms, perhaps? Might this cause lenders to participate in the platform soon? 

Time will tell. Until then, I’ll leave you with some good reads. 

• Budget 2024: Will the Finance Ministry address the many challenges plaguing India’s fintech sector?  

• Too premature to talk about interest rate cuts, says RBI Governor Das  

• RBI allows forex accounts in GIFT City, widens LRS scope  

• RBI red flags 'lakhs' of accounts used for fraud and evergreening  

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to always get all updates. 

Cheers, 

Mayank