Credit and finance for MSMEs: The Reserve Bank of India’s (RBI) financial data-sharing system Account Aggregator (AA), launched in September 2021, has onboarded 94 financial institutions as financial information users (FIUs) as of December 12, 2022. Out of 94 FIUs, 73 are RBI regulated, 10 are regulated by the markets regulator Securities and Exchange Board of India (SEBI), nine by the insurance regulator Insurance Regulatory and Development Authority of India (IRDAI) and two by pension fund body Pension Fund Regulatory and Development Authority (PFRDA).
The details were shared by Minister of State for finance Bhagwat Karad in a written reply to a question in the Lok Sabha earlier this week. Apart from FIUs, 26 entities are registered on the AA network as financial information providers (FIPs) including 12 public sector banks, 10 private banks, one small finance bank and three life insurance companies.
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FIPs are institutions such as banks, NBFCs, insurance companies, etc., having customers’ financial data to be shared with FIUs or customers through six AAs viz., Finsec AA Solutions, Cams Financial Information Services, Cookiejar Technologies, National E-Governance Services Limited (NESL) Asset Data Limited, Perfios Account Aggregation Services and Yodlee Finsoft on the AA network. Here banks and NBFCs could be both FIPs and FIUs.
AA network “could facilitate investing and credit, giving consumers access and control over their financial records and expanding the potential pool of customers for financial sector entities and fintech companies. AA take data from one financial institution to another based on an individual’s direction and consent. However, registering with an AA is fully voluntary for consumers,” said Karad.
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Importantly, In November 2022, the central bank had announced the inclusion of the Goods and Services Tax Network (GSTN) as the latest FIP to enable information on GST Returns, viz. form GSTR-1 and GSTR-3B available to FIUs.
While the AA network intends to ease the credit disbursement process for MSMEs, the latter are looking for some value-added services in return for their consent to share their data. A survey of over 1,000 MSMEs by Boston Consulting Group in November this year noted that around 40 per cent of respondents were comfortable sharing their business data with banks while expecting technology-enabled value-added services in return. 24 per cent of respondents said they would be looking for lower interest rates while a discount on processing charges was sought by 21 per cent of MSMEs part of the survey and 16 per cent expected a better customer experience.
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