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SEBI to join AA framework soon: Buch



SEBI chief says it is in the implementation stage

SEBI will soon join Account Aggregator (AA) framework, according to its chief Madhabi Puri Buch. 

Buch observed that the framework is in the implementation stage whereby it is exchanging data and API (Application Programming Interface) formats with the market participants regulated by it. So, the entire depository and mutual fund systems will soon be online on the AA framework.

An Account Aggregator is a non-banking finance company (NBFC), which retrieves or collects financial information (including bank deposits, equity shares, bonds, mutual fund units, insurance policies) of a customer and consolidates, organises and presents such information to the customer or any other financial information user (an entity registered with and regulated by any financial sector regulator).

Eliminating paper trials

According to RBI, an AA can provide services to a customer based on the customer’s explicit consent. Transfer of financial data and the response is envisaged to occur in real time. “AA framework assists in decision-making required for provision of various financial services—lending, loan monitoring, wealth management, personal finance management, etc.,—by eliminating paper trails.“…Further, AAs can facilitate the access to financial services and credit to earlier underserved and unserved segments by reducing information asymmetry,” RBI Deputy Governor M Rajeshwar Rao had said in a speech in September 2021.

The framework for AA was issued by RBI in September 2016 with the objective of facilitating aggregation of all financial assets of an individual.

According to a 2020 Niti Aayog document, just as the launch of UPI (unified payments interface) transformed India’s digital payments world irreversibly, it is expected that the RBI-driven AA model will transform the way financial services are delivered through a unique architecture for consent-based data sharing. “In the AA model, individuals can seamlessly share their financial data for the first time across banks, insurers, investors, tax collectors, and pension funds in a safe, secure, and consented manner. This has the power to transform the availability and affordability of financial products,” as per the document.

Published on

April 30, 2022

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