{"id":11705,"date":"2022-08-29T06:36:22","date_gmt":"2022-08-29T06:36:22","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=11705"},"modified":"2022-10-18T06:26:02","modified_gmt":"2022-10-18T06:26:02","slug":"account-aggregator-system-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/","title":{"rendered":"Overview of Account Aggregator System in India"},"content":{"rendered":"\n<p>Account aggregators are institutions that\nact as an intermediary that will share an individual&#8217;s financial information\nwith various entities if the consumer consents to it. NBFC Account aggregators\nhave been termed as &#8220;consent brokers&#8221;. The Reserve bank of India\nintroduced Account Aggregator System in India in September of 2016 as a part of\nits master directions. In this Blog, we shall discuss about the Account\nAggregator System. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a28cee11902f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a28cee11902f\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/#What_is_the_need_for_Account_Aggregators\" title=\"What is the need for Account Aggregators?\">What is the need for Account Aggregators?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/#Responsibilities_of_an_Account_Aggregator\" title=\"Responsibilities of an Account Aggregator:\">Responsibilities of an Account Aggregator:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/#Benefits_of_Account_Aggregator_License\" title=\"Benefits of Account Aggregator License:\">Benefits of Account Aggregator License:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/#Challenges_of_Account_aggregators\" title=\"Challenges of Account aggregators\">Challenges of Account aggregators<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/account-aggregator-system-in-india\/#Conclusion\" title=\"Conclusion:\">Conclusion:<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_need_for_Account_Aggregators\"><\/span>What is the need for Account Aggregators?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The government is digitizing the financial\nsector with an aim to make it more transparent and secure. One such step taken\nby it is to introduce the Account aggregators to the financial system. Account\naggregator mechanisms are revolutionary in the lending system. We know that\nwhile borrowing funds from financial institutions such as banks and NBFCs, we\nare required to share numerous documents such as signed copies of bank\nstatements, etc. on top of that, we need to get those documents notarised and\nstamped. At times we even share our personal account details with third\nparties. This sharing of personal information and documents had become a\ncumbersome process. In order to deal with this issue Account aggregator system\nhas been introduced. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Responsibilities_of_an_Account_Aggregator\"><\/span>Responsibilities of an Account Aggregator:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li><strong>Consent:<\/strong> The transfer of the client&#8217;s data to any financial institution should solely be done upon the client&#8217;s consent. The information shall only be shared by the customer or by FIU as per the terms mentioned in the permit.<\/li><li><strong>Safety:<\/strong> The Account aggregator must ensure that all the data of clients that are stored with them remains secure. Account Aggregator Systems in India must ensure the introduction of proper safety measures.<\/li><li><strong>Documentation:<\/strong> All transactions between the customer and the Account aggregator must be carried out with proper documentation and authorizations. <\/li><li><strong>No other business:<\/strong> An AA cannot get itself involved in any other business. An <strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-account-aggregator-license\" class=\"text-primary\">Account aggregator<\/a><\/strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-account-aggregator-license\"> <\/a>entity must solely work for this business only. <\/li><li><strong>Third-party services:<\/strong>&nbsp; cannot use any third-party services in its business. Keeping in mind the sensitive information that is being recorded, no third-party involvement shall be allowed in the Account aggregator system.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Account_Aggregator_License\"><\/span>Benefits of Account Aggregator License:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Some of the benefits of the Account\naggregator license are listed below:<\/p>\n\n\n\n<ul><li><strong>Consolidation of User data:<\/strong> The user can see all his financial information on a single portal. This will make it easy for the person to manage his finances. The user will not even have to look for documents he requires for borrowing loans. He shall be able to share the documents easily with the concerned <strong>stakeholders<\/strong><sup><a class=\"text-primary\" href=\"https:\/\/en.wikipedia.org\/wiki\/Stakeholder_(corporate)\"><strong>[1]<\/strong><\/a><\/sup>.<\/li><li><strong>Unified Framework:<\/strong> The Account aggregator framework shall enable people to easily share financial information with the different service providers, including Wealth service providers, banks, portfolio managers etc. All the Clients&#8217; information is stored under one head and shared in real-time.<\/li><li><strong>Consent based-data sharing:<\/strong> The Account aggregators shall share the data only upon the user&#8217;s consent. The user shall have control of all the access to the data, and once the user gives consent, it shall be irrevocable. If a situation arrives where the individual needs to revoke his consent, then the issue has to be resolved by the financial information user (FIU) through physical mode.<\/li><li>Control lies with the User: The Account aggregator framework is fairly simple. It clearly specifies where the client&#8217;s information has been sent, with whom that information has been shared, the purpose of sharing such data and the duration and the frequency with which it has been shared. The user shall have clear control over such things.<\/li><li><strong>Security: <\/strong>Being in a digital format, the data remains secure. The data stays in an encrypted form; this means that only the receiver shall be able to view the contents of the data and no one in between. All the parties that are the Account aggregator and the Even the FIUs need to adhere to strict compliances to ensure that the individual&#8217;s data remains secure.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Challenges_of_Account_aggregators\"><\/span>Challenges of Account aggregators<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to experts, there are a few\nchallenges that the Account aggregator system in India will have to face these\nare:<\/p>\n\n\n\n<ul><li><strong>RBI&#8217;s Vision: <\/strong>RBI&#8217;s vision with the Account aggregators has tended to be positive. However, this system is in its nascent stages. In order to make it a long-running success and an inseparable part of our financial system, it must be able to address the concerns of the larger picture, such as a consolidated user base, data security and a user&#8217;s willingness to incorporate this system.<\/li><li>Profitability: In order for Account aggregator systems to be a resounding success, it must ensure that this business is successful. RBI&nbsp; must ensure that norms are introduced to enable the creation of an extensive user database and ensure that this data is easily transferable across the entities in a secure manner. If the Financial Information providers (FIPs) see it as a profitable business,  more aggregators will join the framework.<\/li><li><strong>Emerging Technology:<\/strong>&nbsp; As the account aggregator framework is an emerging technology, people are quite apprehensive about using them. So RBI needs to ensure that the Account \u2013aggregator system has a steady pace of growth so that new developments and innovations can be brought into the system so that it becomes commercially successful.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion:<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>\n\nThe Account Aggregator system will enable the user to disburse his\nfinancial information to borrowing institutions easily. It shall make the\nprocess simple and safe for the user as effective data security measures are in\nplace, and consent-based transfer at the user&#8217;s end makes it a great tool. If\nit becomes successful, the system can also be extended to various institutions\napart from finance.\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Account aggregators are institutions that act as an intermediary that will share an individual&#8217;s financial information with various entities if the consumer consents to it. NBFC Account aggregators have been termed as &#8220;consent brokers&#8221;. The Reserve bank of India introduced Account Aggregator System in India in September of 2016 as a part of its master [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":11706,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2,58],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11705"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=11705"}],"version-history":[{"count":8,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11705\/revisions"}],"predecessor-version":[{"id":12208,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/11705\/revisions\/12208"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/11706"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=11705"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=11705"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=11705"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}