The account aggregator system was developed to improve accessibility to financial data. This is accomplished by the development of intermediaries known as account aggregators (AA), which gather and exchange financial data between companies that store consumer data and entities that seek consumer data. Companies requesting this data are known as Financial Information Users, while the organisations keeping it are known as Financial Information Providers (FIPs).
A non-banking finance corporation (NBFC) controlled by the RBI called the account aggregator RBI, also referred to as AA, enables the collection of clients’ financial information from financial information providers with their consent. With the complete consent of the consumer, AA is able to consolidate, organise, and communicate the financial information to the customer or FIU.
With PSU banks joining regularly, it already has the most banks on its platform. The Reserve Bank of India (RBI) has successfully closed the gap between the demand and supply of retail lending in India by introducing account aggregation framework. A sizable number of borrowers with little or no credit history can now obtain credit. A new class of non-banking financing organisations that can function as account aggregators was authorised by the RBI in 2016. The framework has been improved throughout time with a better description and comprehension of AAs, resulting in a public introduction in September 2021. The RBI has recognised and regulated account aggregator RBI (AA), which assists clients in safely and digitally accessing their financial data from their banks and sharing it, if they like, with other participating financial institutions. Customers may rest easy knowing that only they have control over their data because the AA can’t “see” it for themselves.
How is this being discussed?
The AA framework’s proponents see it as a significant step towards a connected financial ecosystem. The framework will offer a safe and effective method of exchanging financial data, lowering transaction costs and financial frauds while prioritising user consent. The user will be able to receive quick baking services for less money if these cost savings are transferred to them. On the other hand, detractors contend that the AA framework permits the sharing of potentially limitless quantities of sensitive personal data with an unrestricted number of entities for no particular reason. As sharing of financial information in this case is unrelated to the provision of any financial services, policy analysts have questioned the RBI’s role in controlling the flow of sensitive personal data.
The ecology of account aggregation consists of four parties:
- The end user, or data principal, who has an account with a bank, an AMC, an insurance company, etc.
- An organisation with which the client has a financial account.
- An FIU may be a regulated institution that is governed by the PFRDA, the Securities Exchange Board of India (SEBI), the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Reserve Bank of India (RIB). Where appropriate, FIUs also take part in FIPs.
- Account aggregator RBI (AAs) are authorised organisations that assist data principals in securely accessing their FIP-held data and sharing it with the FIUs. In essence, AAs manage consent.
All significant PSU and private sector banks are now listed as FIPs on the account aggregator network, thanks to a coordinated effort between the Finance Ministry, the RBI, and the banks. According to some estimates, this enables users to link and exchange data from over a billion bank accounts for their personal gain. The volume and breadth of data available on the network will truly astound as new data sources like GSTN, SEBI, and IRDAI regulated firms join.
According to the regulations, FIPs in the securities market will need to establish a legal agreement with the AAs. It will clearly outline each party’s duties and responsibilities as well as the procedures for resolving disputes. The legality of client consent, specific dates and usage, and the credentials of the account aggregator RBI will all require verification by FIPs. The financial information will be digitally signed by the FIPs in the securities markets when the consent has been properly verified and securely transmitted to the AA.
Financial inclusion will increase in speed and breadth
For many years, opening bank accounts for the underprivileged and ensuring that welfare payments reached them directly constituted financial inclusion. These bank accounts are producing digital data for those who were previously excluded since the JAM trinity efficiently and at scale solves this problem. For example, these clients might use account aggregator RBI to secure low value, short-term, cash-flow based credit utilising their banking and GSTN data. Account aggregators will make it simpler and safer for these customers to disclose their data for their advantage. The scope of financial inclusion can soon expand to understand not just a customer’s urgent demands but also long-term financial health when insurance, securities, and pension industries join the network.
So what makes Anumati unique?
Anumati is currently in the lead despite the RBI having only granted six account aggregator RBI so far because of three significant advantages. Anumati is a division of Perfios Software, a market leader in data extraction, aggregation, and analysis for over 250 financial institutions. It is fluent in the language of the FIU. The brand is aware of what is necessary to provide FIUs and clients with a frictionless and secure experience while gaining access to and sharing sensitive data.
Anumati is the biggest single network of FIPs, with 15 currently and more on the way, and it represents more than 40% of all retail and SME accounts. This number will increase dramatically once they are able to engage directly with the PSU Banks who are eager to join the network! Strategic investors for Anumati include Bajaj Finserv, HDFC Bank, ICICI Bank, and SBI. These organisations, which form the backbone of India’s financial system, are devoted to seeing Anumati develop into the country’s biggest and most reliable data network.
Also read: How rbi account aggregator framework can work for you