Everything you need to know about the RBI’s Account Aggregators System for small and medium businesses in India.
On September 2, 2021, the Reserve Bank of India (RBI) launched the Account Aggregators system, also known as the Account Aggregator (AA) network, a financial data-sharing system that aims to revolutionise investing and credit by giving millions of consumers greater access and control over their financial records, as well as expanding the potential pool of customers for lenders and fintech companies.
Account Aggregator gives people authority over their own financial data, which would otherwise be locked up in silos.
What are Account Aggregators (AA) and what do they do?
An Account Aggregator (AA) is an RBI-regulated firm (with an NBFC-AA licence) that assists an individual in securely and digitally accessing and sharing information from one financial institution to any other regulated financial institution in the AA network. Without the agreement of the subject, data cannot be shared. There will be a number of Account Aggregators to choose from. Account Aggregator substitutes the lengthy terms and conditions of a “blank check” acceptance with granular, step-by-step consent and control over each usage of your data.
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Small Business & Individual Advantages
Consumers in India’s financial system face several challenges today, including exchanging physical signed and scanned copies of bank statements, rushing about to notarize or stamp papers, and revealing personal login and password to provide financial information to a third party. All of these would be replaced by the Account Aggregator network’s easy, mobile-based, and secure digital data access and sharing method. This will open the door to new forms of services, such as new types of loans.
The only need is that the small business owner or any individual’s bank joins the Account Aggregator network. Four banks have previously done so (Axis, ICICI, HDFC, and IndusInd Banks), and four more will be able to do so soon (State Bank of India, Kotak Mahindra Bank, IDFC First Bank, and State Bank of India).
What kind of information can be shared?
Banking transaction data (for example, bank statements from a current or savings account) is now accessible to be shared between the banks that have joined the network.
Thanks to the Account Aggregator AA framework, local consumers will eventually have access to all financial data, including tax, pension, securities (mutual funds and brokerage), and insurance data and much more. It will also extend beyond banking, allowing anybody to use AA to access healthcare and communications data.
What additional services may a consumer get if their bank joins the AA data-sharing network?
Access to loans and access to money management are the two primary services that will be enhanced for individuals. Many documentation must be supplied with the lender if a consumer wants to receive a small company or personal loan nowadays. Today, this is a time-consuming and tedious process that influences the time it takes to obtain a loan and access to one. Money management is also tough nowadays since data is kept in a variety of places and cannot be readily brought together for analysis.
A corporation may use Account Aggregator to rapidly and cheaply obtain tamper-proof protected data and expedite the loan review process so that a client can acquire a loan. Also, by providing reliable information about a future invoice or cash flow straight from a government system like Udyam registration certificate, GST or GeM, a client may be able to obtain a loan without putting up any physical collateral.
How can a local customer become an AA member?
An AA’s app or website can be used to register a client. AA will provide you a handle (similar to a username) to use during the consent procedure.
Finvu, OneMoney, CAMS Finserv, and NADL are the four applications having operating licences to be AAs that are now accessible for download. Three more (PhonePe, Yodlee, and Perfios) have obtained RBI’s preliminary permission and may be launching apps shortly.
Is it possible for AAs to see or ‘aggregate’ personal data? Is it safe to share data?
Account Aggregators do not view the data; they just transfer information from one financial institution to another with the permission and direction of the individual. They can’t ‘aggregate’ your data, despite the moniker. AAs aren’t like tech businesses that compile your data and construct extensive profiles of you.
The sender encrypts the data that the AAs communicate, and only the receiver may decode it. The method is far more secure than transferring paper documents due to end-to-end encryption and the usage of technologies such as the “digital signature.”
So here is the question do you require digital secure accessibility for your small business.