On September 2 eight of India’s major banks — State Bank of India, ICICI Bank, Axis Bank, 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.
The account aggregator system in banking has kicked off with eight of India’s largest banks. When fully functional, the system can make lending and wealth management a lot faster and cheaper.
What is an Account Aggregator?
According to the Reserve Bank of India, an Account Aggregator is a non-banking financial company engaged in the business of providing, under a contract, 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.
The AA framework was created through an inter-regulatory decision by RBI and other regulators including Securities and Exchange Board of India, Insurance Regulatory and Development Authority, and Pension Fund Regulatory and Development Authority (PFRDA) through and initiative of the Financial Stability and Development Council (FSDC). The licence for AAs is issued by the RBI, and the financial sector will have many AAs.
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.
For more details please read here: Here's how account aggregators can make bank borrowings easier
Source: Livemint, Money Control & Indian Express