Why in news
- The Reserve Bank of India has allowed interoperability across Account Aggregators (AAs) to broaden financial data sharing.
- The decision enables users to seamlessly transfer financial data across different Financial Information Providers (FIPs) and Financial Information Users (FIUs).
Key terms
Account Aggregator
An RBI-regulated NBFC that helps individuals securely access and share information from their financial accounts.
Financial Information Provider
An entity like a bank, mutual fund, or insurer that holds user financial data.
Financial Information User
An entity such as a bank or NBFC that receives financial data to provide services like loans.
Interoperability
The ability of different information systems and platforms to communicate and exchange data seamlessly.
What is the Account Aggregator Framework?
- Introduced by the RBI in 2016 as a Non-Banking Financial Company (NBFC-AA) regulated entity.
- Facilitates consent-based retrieval and sharing of financial information among financial institutions in the AA network.
Key Regulatory Changes
- Interoperability enables cross-platform communication between disparate AA networks without requiring separate user registrations.
- Before: Financial information was siloed within specific non-interoperable aggregator platforms.
- After: End-users can leverage any registered AA to fetch data from any onboarded Financial Information Provider.
Why it Matters
- Reduces friction in credit assessment, enabling faster loan processing for MSMEs and retail borrowers.
- Strengthens data governance by ensuring explicit, revocable user consent across the entire financial system.
Prelims facts
- Account Aggregators act as data intermediaries and cannot view or store customer data.
Mains discussion
- Role of Account Aggregators in deepening digital financial inclusion and democratising credit access.
Source: Hindu Business Line
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