Account Aggregator (AA)
Part of: Prelims and GS – III- Economy
Context: Recently, eight of India’s major banks — SBI, ICICI, Axis, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank and Federal Bank — joined the Account Aggregator (AA) network that will enable customers to easily access and share their financial data.
- The framework, which has been under discussion since 2016 and in the testing phase for some time, will now be open to all customers.
About Account Aggregator
- According to RBI, an Account Aggregator is a non-banking financial company engaged in the business of providing the service of retrieving or collecting financial information pertaining to its customer.
- It is also engaged in consolidating, organising and presenting such information to the customer or any other financial information user as may be specified by the bank.
- An Account Aggregator is a financial utility for secure flow of data controlled by the individual.
- It will compile all the digital footprints of the customer at one place and make it easy for lenders to access it.
- The licence for AAs is issued by the RBI, and the financial sector will have many AAs.
- Significance of AA:
- It reduces the need for individuals to wait in long bank queues, use Internet banking portals or share their passwords to access and share their financial documents.
- It is an addition to India’s digital infrastructure as it will allow banks to access consented data flows and verified data. This will help banks reduce transaction costs & offer more tailored products and services to customers.
- It will also help us reduce frauds and comply with upcoming privacy laws.
What is AA Framework?
- The AA framework was created through an inter-regulatory decision by RBI and other regulators including SEBI, IRDAI, and PFRDA through and initiative of the Financial Stability and Development Council (FSDC).
- The AA framework allows customers to avail various financial services from a host of providers on a single portal based on a consent method, under which the consumers can choose what financial data to share and with which entity.
Can an AA see or store data?
- Data transmitted through the AA is encrypted. AAs are not allowed to store, process and sell the customer’s data.
- No financial information accessed by the AA from a Bank should reside with the AA.
- It should not use the services of a third-party service provider for undertaking the business of account aggregation.
- User authentication credentials of customers relating to accounts with various Banks shall not be accessed by the AA.