Imperative to ensure orderly growth of account aggregator ecosystem: RBI

Account Aggregators (AA) are entities that enable financial data sharing from Financial Information Providers (FIPs) to Financial Information Users (FIUs), based on the consent from the customers.

The Finance Ministry on May 9, 2019, had provided a detailed procedure for processing of applications under Section 11A of the PML Act, 2002 for use of Aadhar authentication services by entities other than banking companies.

The account aggregator ecosystem in the country is in a nascent stage and there is a need for its orderly growth, Reserve Bank of India’s deputy governor M Rajeshwar Rao said on Thursday.

Account Aggregators (AA) are entities that enable financial data sharing from Financial Information Providers (FIPs) to Financial Information Users (FIUs), based on the consent from the customers.

“The account aggregator ecosystem is still in a nascent stage of development. But given the sensitivity of the platform on account of the nature of data handled by it, it becomes imperative to ensure that the growth is orderly,” Rao said while speaking at iSPIRIT Foundation event.

AA acts as an intermediary and helps connect the customer to multiple Financial Information Providers (FIPs) through standardised API (Application Programming Interfaces).

Some of the account aggregators that have received approval from RBI include CAMSFinServ, Cookiejar Technologies Pvt Ltd, FinSec AA Solutions Pvt Ltd and NSEL Asset Data Ltd, among others.

The deputy governor said as the business of account aggregators grow, it is feasible for different categories of financial institutions, under the jurisdiction of different financial regulators, to talk to one another over their respective technology based platforms.

“Seamless movement of data over different institutions with complete confidentiality will be the basic requirement for orderly growth and smooth functioning of the account aggregator framework,” he said.

While the RBI is open to and encourages innovation, there is a need to maintain balance between innovation and the spirit of account aggregator regulatory structure, he noted.

“We do support innovation in financial space, but the support and encouragement will be done while ensuring that we develop and grow a robust financial system to support a vibrant and growing economy,” Rao said.

He said to ensure seamless and secure flow of data across the account aggregators and the financial information providers, there is a need to have some generic technical standards prescribed for the account aggregator ecosystem participants so that the moment of data is truly authorised and secure.

The larger goal of the account aggregator is to empower customers and reduce information asymmetry. It is aimed at ensuring that the customer has full control over the information that is being shared through the account aggregator, he said.

Account aggregator frameworks also benefit the users as they get access to the financial information of potential customers on a real-time basis, reducing the turnaround time for the provision of financial services, he said.

“The account aggregators can thus bolster the lending ecosystem, which can make India a data-rich country and also boost the digital economy,” Rao said.

The systems will function optimally only when a variety of customer accounts is maintained across different financial entities, cutting across the financial sector regulators are linked to the account aggregator.

“For this to happen, the information providers need to see value in the framework. This, in my view, is a key to the development of a viable business model for the account aggregator ecosystem in India,” he added.

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