Eight Banks To Go Live On Account Aggregator Ecosystem
Using account aggregators, customers can give consent for their financial data to be shared digitally.
Four account aggregators, eight banks and the government's Goods and Services Tax Network will be the early birds to join the account aggregator framework, which launched on Thursday.
The framework, which has been under discussion since 2016, will now be open to all customers. It has been in testing phase for some time now.
The AA framework allows customers to avail various financial services from a host of service providers on a single portal. The framework works on a consent architecture, where the consumers can choose what financial data to share and with whom. Once this consent is in place, service providers can use it to reduce the time and friction involved in offering financial products.
At an online event organised to launch account aggregators, Reserve Bank of India Deputy Governor M Rajeshwar Rao said the framework would help improve the availabilty of financial services, while eliminating the paper trail.
"Disruptions to business due to the Covid-19 pandemic have worsened the credit gap in the country. This credit gap can further cause delays in the credit approval process. The account aggregators can act as intermediaries here to provide accurate financial data with explicit consent of the borrowers," Rao said.
The framework could help reduce compliance cost for micro, small and medium enterprises, which can avail quicker credit approvals, Rao said.
In July, BloombergQuint had reported that at least four banks, including HDFC Bank, ICICI Bank, Axis Bank and IndusInd Bank, had started testing the framework by offering financial services to a limited number of customers. Four more banks — State Bank of India, Federal Bank, Kotak Mahindra Bank and IDFC First Bank — are also going live shortly, Sahamati said in a statement.
Sahamati is a collective working on popularising the account aggregator framework among financial services providers and users.
Apart from the banks mentioned above, non-bank lenders such as Bajaj Finance Ltd. and DMI Finance are also joining the network.
HDFC Bank and Axis Bank have been using account aggregators for auto loans, LendingKart has been using them for MSME loans, while IndusInd Bank has been using it for personal finance management, Sahamati said in its statement.
"Talks are also on to on-board telecom data of customers on the account aggregator framework. Someone who has been paying their phone bills regularly can get credit through account aggregators," said Nandan Nilekani, non-executive chairman, Infosys. Nilekani has also aided the development of the account aggregator framework.
The account aggregator framework could also expand to offer better healthcare to users, as the ecosystem develops further, Nilekani said.
While Finvu, OneMoney, NESL and CAMS Finserv are already live as account aggregators. Three more companies, PhonePe, Perfios and Yodlee have received in-principle approval from the RBI.