NEW DELHI: The recently introduced Account Aggregator system will help individuals and small businesses obtain loans from banks without any hassle by digitally sharing financial data between institutions.
The Account Aggregator system will also improve the management of money by the entities involved, according to a series of FAQs published by the Ministry of Finance to explain the concept and answer doubts.
Account aggregators (AAs) are entities that enable the sharing of financial data from Financial Information Providers (FIPs) to Financial Information Users (FIUs), based on customer consent.
Last week, India unveiled the Account Aggregator (AA) network, a financial data sharing system that could revolutionize investing and lending, giving millions of consumers better access and control over their records. and expanding the potential customer base for lenders and fintech companies.
This is the first step towards opening up banking services in India and enabling millions of customers to digitally access and share their financial data between institutions in a secure and efficient manner, he said. .
The AA system started last week with eight banks, he said, adding that the AA system can make lending and wealth management much faster and cheaper.
It will also help to benefit from banking services including hassle free lending and avoid sharing of signed and scanned physical copies of bank statements etc.
The AA network allows the sharing of transaction data or bank statements of savings / deposit / current accounts in the format encrypted by the sender and can only be decrypted by the recipient.
Gradually, the AA framework will make all financial data available for sharing, including tax data, pension data, securities data (mutual funds and brokerage), and insurance data will be updated. available to consumers.
It will also extend beyond the financial sector to allow healthcare and telecommunications data to be accessible to the individual through AA, he said.
AA acts as an intermediary and helps connect the client to multiple Financial Information Providers (FIPs) through a standardized API (Application Programming Interfaces).
Some of the account aggregators that have received RBI approval include CAMSFinServ, Cookiejar Technologies Pvt Ltd, FinSec AA Solutions Pvt Ltd, and NSEL Asset Data Ltd, among others.
The broader purpose of the account aggregator is to empower customers and reduce information asymmetry.
With AA, a business can quickly and inexpensively access secure tamper-proof data and speed up the loan appraisal process so that a customer can obtain a loan.
Additionally, he said, a client may be able to access a loan without physical collateral, by sharing reliable information about a future bill or cash flow directly from a government system like the Goods and Services Tax (GST) or Government Electronic Marketplace (GeM).