NSDL acquires 5.6% stake in ONDC for Rs 10 crore
Leading depository NSDL announced on Wednesday that it has paid Rs 10 crore for a 5.6 per cent ownership in the Open Network for Digital Commerce of the Union government.
According to a statement from the depository, National Securities Depository Limited (NSDL) invested Rs 10 crore in ONDC through a private placement.
According to Padmaja Chunduru, MD and CEO at NSDL, “this strategic deal would further strengthen the digital ecosystem to bring digital e-commerce to the people of India.”
The Commerce Ministry’s ONDC drive to build an open, public digital infrastructure, whilst NSDL’s facilitation, holding, and transfer of securities in dematerialized form have been vital in revolutionizing the Indian securities industry.
Owners of NSDL demat accounts are supported by 58,000 service centres for the Depository Participants. Its investors have dispersed over 189 nations and 99 per cent of India’s pin codes.
According to T Koshy, MD and CEO of ONDC, “We are happy to have NSDL as a shareholder who will be of strategic advantage considering their experience in reach and technology.”
Over 5.5 per cent of ONDC was purchased by the government-owned Bank of India last month for Rs 10 crore. Several other banks had bought holdings in ONDC and Bank of India.
ONDC aims to advance open networks for all facets of the country’s electronic or digital trade in products and services. The framework is anticipated to increase the accessibility and inclusivity of e-commerce for both buyers and merchants.
About NSDL
An Indian central securities repository with its headquarters in Mumbai is called National Securities Depository Limited (NSDL). It was created in August 1996 and is India’s first nationwide computerized securities depository. It was created due to a recommendation made by a national organization in charge of India’s economic growth. The assets in its demat accounts are worth $4 trillion.
Through its nationwide network of Depository Participants, or DPs, and digital platforms, NSDL provides services to investors, stock brokers, custodians, issuer firms, Savings account current account, Business correspondence, etc.
History
Despite a thriving capital market over a century old, paper-based trade settlement in India created major issues like poor delivery and sluggish title transfer. The National Securities Depository Limited (NSDL), India’s first depository, was established thanks to the adoption of the Depositories legislation in 1995. NSDL is one of the world’s largest depositories. The majority of the securities held and settled in the de-materialized form in the Indian securities markets are handled by its cutting-edge infrastructure.
Depository accounts, which resemble bank accounts holding money, are used to hold securities. Securities ownership is transferred through straightforward account transfers.
This strategy eliminates all the dangers and difficulties typically connected with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower than transacting in physical certificates.
India first heard of “Demat”, thanks to NSDL. NSDL allowed the Indian securities markets to adopt T+2 settlement in less than eight years of operation. T+1 settlement is now being implemented gradually in Indian marketplaces.
Company structure
National Securities Depository Limited, NSDL Database Management Limited (NDML), and NSDL Payments Bank Limited are the three distinct entities that make up the NSDL Group. National Security Depository Limited has two subsidiary companies: NDML and NSDL Payments Bank (NSDL). It provides services for the transfer, settlement, and demat of securities on the Indian Securities Market.
Protean e-Gov Technologies Limited (formerly NSDL e-Governance Infrastructure Limited) is a distinct business. It provides PAN card issuing services and serves as the National Pension System’s main record-keeping organization.
NSDL Facts & Figures
As of June 30, 2022, NSDL had more than 2.80 billion demat accounts. NSDL holds a market share of more than 89% regarding the value of demat assets. More than 99% of pin codes in India and 189 other countries have NSDL demat account holders. More than 89% of the value of assets held in demat form in India is contributed by it. It accounts for the majority of settlements in the Indian securities markets.
About ONDC
Open Network for Digital Commerce (ONDC), a private, non-profit Section 8 corporation, was established by the Department for Promotion of Industry and Internal Trade (DPIIT) of the Government of India to promote open e-commerce. The Quality Council of India and Protean eGov Technologies Limited provided the initial finance, and it was incorporated on December 31, 2021. (formerly NSDL e-Governance Infrastructure Limited).
The ONDC is a collection of guidelines created to encourage connectivity and open communication among customers, technological platforms, and merchants. It is not software, a middleman, or an application.
ONDC was created as a result of technological independence, small retailers’ demands for level playing fields, lower entry and discovery barriers online, the adoption of an open digital ecosystem across key industries, and changes made to the anti-competitive practises of large e-commerce companies like Amazon and Flipkart to compete for the US$810 billion domestic retail market. By integrating them into an open-source, decentralized network where data portability will break down data silos, and data interoperability will enable innovation, this system is intended to prevent Big Tech companies from violating the Consumer Protection (E-Commerce) (Amendment) Rules, 2021 as a result of market power concentration.
History
The Department established a nine-person advisory council for the Promotion of Industry and Internal Trade on July 5, 2021. The mission of developing the ONDC based on open-source methodology employing open standards and network protocols was given to the Quality Council of India (QCI). Within two years of its introduction, it plans to cover 25% of domestic internet commerce by integrating inventory, logistics, and dispute resolution.
ONDC will unbundle delivery services so customers can select their preferred logistics company. While DPIIT sanctioned ten crore as an initial investment, QCI set up a team of specialists and recruited certain small and medium-sized companies as volunteers to carry out the project till 26 October 2021.
Several public and private sector organizations acquired holdings in ONDC between November 2021 and March 2022 by making seed money investments to become early promoters.
The Punjab National Bank is among them (9.5% for 25 crore). Indian State Bank (7.84% for 10 crore). Bank Kotak Mahindra (7.84%) Investments by BSE (5.88%). Central Depository Services Bank of India (5.97% for 10 crore). SIDBI (7.84% for 10 crore) Small Industries Development Bank of India On March 23, 2022, the Common Service Centers (CSC) of the Ministry of Electronics and Information Technology (MeitY) declared that they would use 3 Lakh Grameen e-Stores to promote ONDC for e-commerce and logic in rural areas.
On behalf of ONDC, promoters National Payment Corporation of India (NPCI) and the National Stock Exchange of India (NSE) pledged funds. On August 31, 2022, the RBI and the Ministry of Finance approved NPCI’s purchase of a 10% share in ONDC for a sum of 10 crore. Bank of India invested ten crore in purchasing 5.56% of the company.
Investments into the project totalling 255 crore (US$32 million), including those from UCO Bank, HDFC Bank, Bank of Baroda, etc. 7.84% of ONDC was purchased by HDFC Bank. Seventeen banks and commercial organizations gave 157.5 crore to ONDC in April for the project’s first stage. For the trial project, Gofrugal Technologies provided the enterprise resource planning software, GrowthFalcons handled the digital marketing, and SellerApp assisted sellers with automation and offered digital intelligence on sales.
eSamudaay will help with the consumer-facing interface. SIDBI and ONDC signed a Memorandum of Understanding (MoU) on August 9, 2022, to include small businesses in the network. Yes Bank is collaborating with SellerApp for business enterprise customers to ease the transition to ONDC.
According to Nandan Nilekani, the Account Aggregator Network (AAN) would collaborate with ONDC to efficiently provide everyone in the supply chain with access to formal credit. On August 25, 2022, ONDC and the Jammu and Kashmir Trade Promotion Organization (JKTPO) signed a Memorandum of Understanding (MoU) to promote eCommerce in Jammu and Kashmir.
According to the Union government, one District One Product and ONDC will be combined. On September 8, 2022, IDFC First Bank joined ONDC and encouraged all of its current account holders to conduct business over the network. Piyush Goyal made it clear during discussions at Stanford University that India is interested in developing several unicorns through ONDC rather than a few trillion-dollar eCommerce enterprises.
Objectives
The major objectives include:
- Ending monopolies of the platforms
- Democratization and decentralization
- Digitisation of the value chain
- Standardisation of operations
- Inclusivity and access for sellers, especially small and medium enterprises and local businesses
- Increased efficiency in logistics
- More choices and independency for consumers
- Ensured data privacy and confidentiality
- Decreased cost of operation
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