The Account Aggregator Framework of the Reserve Bank of India (RBI) came into existence from 2nd September 2021 with eight major Indian banks joining the network. It comprises of 8 Indian Banks which are – State Bank of India (SBI), ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank, and Federal Bank.
All these banks have associated with the network as Financial Information Providers (FIPs) and Financial Information Users (FIUs). Collectively, all these banks cover about 40% of India’s banking consumers. It must be noted that Account Aggregator will have access to a consumer’s current and savings bank account data, which sets them apart from the long-established credit bureaus like CIBIL and Experian which only collect lending products data or liability side data.
In 2016, the Central Bank of India i.e. RBI had launched a framework to create an Account Aggregator system. And In 2019, a group of Financial Technology companies came together to work on a market-ready solution of developing an intermediate platform that could manage all these requests after obtaining permission or consent from the consumers.
Just as UPI (Unified Payment Interface), NEFT, or IMPS are the main financial facilities for the safe flow of funds from one bank account to another, Account Aggregator Framework is also a strong financial service or utility for individual-controlled data flow of the consumer.
In today’s post, we will be looking at the Account Aggregator Framework, how it will work, and how you can use it. Here’s an overview:
Before we begin, let me invite you to our Finance Discussion Community on Facebook: FinTalks. Here we share our experiences and discuss queries related to banking, debit cards, and credit cards, mutual funds, stock markets, and more. A lot of offers and discounts related to credit cards are also discussed here. Click Here to Join FinTalks.
What is an Account Aggregator Entity?
In September 2016, the Reserve Bank of India (RBI) had suggested the establishment of an account aggregator that would perform as a common base that would capture all your financial details in a single platform. The Account Aggregator feature will help the consumers share their financial data with intermediary sources or third-party sources safely and securely, and provide the proper control over how their financial data is being utilized on this framework system.
The four main financial regulators in India – Reserve Bank of India (RBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA), and Securities and Exchange Board of India (SEBI) – gathered together to allow the regulated entities under their control to share the financial data of the individual with the account aggregators after obtaining the user consent.
How will the Account Aggregator Framework help your financial advisor take a comprehensive view of your financial portfolio?
Earlier, when you interacted with a financial advisor first-time, you would’ve to maintain your mutual fund account details, insurance policy documents, bank account statements, etc. But now, your financial advisor can access all your financial information and data easily with this framework system where you don’t require gathering all the personal financial documents and other records. By engaging an Account Aggregator Framework, a complete view of your financial status can be shared with an asset manager instantaneously.
How will Account Aggregator help the user with different financial services like loans?
Different loan procedures in India are very complicated for a user, for example, the Home Loan application procedure. As a lender or borrower, you need to submit multiple documents which comprise bank account statements, salary slips, income tax return (ITR), Aadhaar Card, and a Permanent Account Number (PAN). You’ve to arrange these documents from multiple sources and submit them to the lending institution. The borrower or lender has to verify all these documents. Now, with the help of this framework system, all these financial details can be shared with the lending financial entities with a single click using a Smartphone application, and hence the loan processing time is significantly reduced.
Is my financial data completely safe with the Account Aggregator Framework?
The Account Aggregator System doesn’t store any financial data which is transferred between the financial information providers (FIVs) and the consumers for safety purposes. The data transferred or shared through the Account Aggregator Framework is enciphered or encrypted and can only be obtained or accessed by the financial institutions requesting that data.
How do I correct dissimilarities or discrepancies in the data shared with the consumers of financial information?
You need to get it fixed with the Financial Information Providers (FIPs). The Account Aggregators have no role in this aspect, as they don’t have access to the transferred or transmitted data. Once it is completed, you may need to give your permission or consent to the Account Aggregator again.
How to use the Account Aggregator Framework?
You can use any RBI-approved NBFC Account Aggregator Network to link all your Bank Account information in one place. One such app for Android is Finvu. You can download the Finvu app and sign up for an account. After that, you can choose your unique account aggregator id which is known as Virtual User Address (VUA).
If your name is Ajay Sharma, then your finvu VUA can be something like ajaysharma@finvu. This is similar to UPI addresses, which can be accessed across all UPI apps, your VUA is accessible throughout the account aggregator network.
You can then start linking your bank accounts. This is the interface you will see inside the app.
Please note that it will require OTP verification for any bank account you add. No other credentials are necessary. Once you have aggregated all your data in one place, you can then share it with any financial institution where you are applying for loans or credit cards. You can also share it with your financial advisor network. Note that you need to provide consent for such access. You can manage your consent from within the Finvu app. The consent can be set from 1 year up to 10 years, and you can share data of the last 30-60 days each time it is requested.
That’s all about the RBI account Aggregator Framework. I hope you could get the complete picture of it. In case you have further queries don’t forget to comment below. Join our FinTalks Facebook Group for financial discussions and Telegram Channel for getting the latest tech updates.