NEW DELHI: The Account Aggregator system introduced recently will help individuals and small businesses in procuring loans from banks without any hassle by digitally sharing financial data across institutions.
The Account Aggregator system will also improve money management by the concerned entities, said a set of FAQs released by the Finance Ministry with a view to explain the concept and address misgivings.
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.
Last week India unveiled the Account Aggregator (AA) network, a financial data-sharing system that could revolutionize investing and credit, giving millions of consumers greater access and control over their financial records and expanding the potential pool of customers for lenders and fintech companies.
This is the first step towards bringing open banking in India and empowering millions of customers to digitally access and share their financial data across institutions in a secure and efficient manner, it said.
The AA system started off last week with eight banks, it said, adding, the AA system can make lending and wealth management a lot faster and cheaper.
It will also help avail banking services including lending hassle-free and save one from the rigger of sharing physical signed and scanned copies of bank statements etc.
The AA network allows sharing of transaction data or bank statements from savings/deposit/current accounts in encrypted format by sender and can be decrypted only by the recipient.
Gradually the AA framework will make all financial data available for sharing, including tax data, pensions data, securities data (mutual funds and brokerage), and insurance data will be available to consumers.
It will also expand beyond the financial sector to allow healthcare and telecom data to be accessible to the individual via AA, it said.
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 the RBI include CAMSFinServ, Cookiejar Technologies Pvt Ltd, FinSec AA Solutions Pvt Ltd and NSEL Asset Data Ltd, among others.
The larger goal of the account aggregator is to empower customers and reduce information asymmetry.
Through AA, a company can access tamper-proof secure data quickly and cheaply, and fast track the loan evaluation process so that a customer can get a loan.
Also, it said, a customer may be able to access a loan without physical collateral, by sharing trusted information on a future invoice or cash flow directly from a government system like Goods and Services Tax (GST) or Government e-Marketplace (GeM).