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.
