{"id":6847,"date":"2019-10-24T09:30:35","date_gmt":"2019-10-24T04:00:35","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=6847"},"modified":"2020-12-01T16:04:40","modified_gmt":"2020-12-01T10:34:40","slug":"nbfc-account-aggregator-a-framework-on-financial-information-sharing","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/","title":{"rendered":"NBFC Account Aggregator: A Framework on Financial Information Sharing"},"content":{"rendered":"\n<p class=\"has-drop-cap\">On 3rd March 2016, the Reserve Bank of India had sought shareholders\u2019 comments on the \u201cDraft Regulatory Framework for Account Aggregator Companies to promote Consolidated Viewing of Financial Asset Holding.\u201d It foresees the formation of a new class of NBFC (Non-Banking Financial Companies) known as <strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-account-aggregator-license\" class=\"text-primary\">NBFC Account Aggregator<\/a><\/strong>. In the advancement of this framework, RBI issued the\u201d Master Directions Non-Banking Financial Company \u2013 Account Aggregator (Reserve Bank) Directions (AA Master Direction)\u201d on 2nd September 2016.<\/p>\n\n\n\n<p>Though the framework for Account Aggregators got conceptualized in March 2016, but the public sources represent that until the date, only five applicants have received in-principle approval by RBI to operate as Account Aggregators.<\/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-6a308069c3f2c\" 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-6a308069c3f2c\"  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\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#What_is_Account_Aggregator\" title=\"What is Account Aggregator?\">What is Account Aggregator?<\/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\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#What_is_the_significance_of_the_NBFC_Account_Aggregator\" title=\"What is the significance of the NBFC Account Aggregator? \">What is the significance of the NBFC 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\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#Compliance_of_Account_Aggregators\" title=\"Compliance of Account Aggregators\">Compliance of Account Aggregators<\/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\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#How_does_the_system_of_NBFC-AA_works\" title=\"How does the system of NBFC-AA works?\">How does the system of NBFC-AA works?<\/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\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#Key_Responsibilities_of_NBFC-AA\" title=\"Key Responsibilities of NBFC-AA\">Key Responsibilities of NBFC-AA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#Process_of_Account_Aggregator_Registration\" title=\"Process of Account Aggregator Registration \">Process of Account Aggregator Registration <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-account-aggregator-a-framework-on-financial-information-sharing\/#Data_Security_Norms_for_Account_Aggregators\" title=\"Data Security Norms for Account Aggregators\">Data Security Norms for Account Aggregators<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Account_Aggregator\"><\/span>What is Account Aggregator?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Account Aggregator (AA) is a financial entity that aims to consolidate account information by functioning as an aggregator for NBFC customers.&nbsp; It compiles, organizes, and retrieves data of numerous economic engagements by a customer among different accounts like bank accounts, investment accounts, credit card accounts, and other business accounts in a single spot. The activities undertaken by the NBFC Aggregators or consent brokers, such as delivering and sharing financial information of a business or individual with a third party, happens with the consent of the customer. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_significance_of_the_NBFC_Account_Aggregator\"><\/span>What is the significance of the NBFC Account Aggregator? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The NBFC-AA plays an essential role in deterring the financial engagement of a customer with the different products of <strong><a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\">NBFC<\/a><\/strong>. Let\u2019s peek into the other aspects in which the Account Aggregators excels: <\/p>\n\n\n\n<ul><li>The primary function of an NBFC Aggregator is to\nrender account information in a consolidated, organized, and retrievable manner\nhelp by the customers. <\/li><li>The NBFC-AA carries out IT-oriented activities\nto provide digital data to the customers.&nbsp;\n&nbsp;<\/li><li>NBFC-AA differs from other NBFC; thereby, its\ncentral function is account aggregation. It means that the aggregators do not\nenter into financial assets transactions with their customers, unlike other\nNBFCs.<\/li><li>An Account Aggregator has the permit to deploy investible\nsurplus in instruments &amp; not for trading. The Board-approved policy of the\naccount aggregator fixes the prices of the services. <\/li><li>The policies and guidelines embraced by NBFC\nAggregators are always transparent in the public domain. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Compliance_of_Account_Aggregators\"><\/span>Compliance of Account Aggregators<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>Here is the list of established guidelines that NBFC Account Aggregators have to follow:<\/strong><\/p>\n\n\n\n<ul><li>The services of an NBFC Account Aggregator\n(NBFC-AA) must get secured with an appropriate agreement between the\naggregator, customer, and financial service provider.<\/li><li>&nbsp;Account\nAggregators must compel with the terms and conditions of the NBFC license like\nprotection of customer, data security, corporate governance, grievance\nredressal, audit control, and risk management framework.<\/li><li>Financial Stability and Development Council\n(FSDC) must associate with the idea of NBFC Account Aggregators (NBFC-AA).<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_does_the_system_of_NBFC-AA_works\"><\/span>How does the system of NBFC-AA works?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFC-AA share financial data from a Financial Information\nProvider to the Financial Information User. For your better understanding here\nis the meaning of both the terms:<\/p>\n\n\n\n<div class=\"shadow6\"><strong>Financial Information Provider <\/strong>(FIP): An entity that offers financial services regulated under the financial sector.<br><br><strong>Financial Information User<\/strong> (FIU): It refers to an entity regulated by financial sector regulators like SEBI, RBI, IRDA, PFRDA.<\/div>\n\n\n\n<p>Account aggregators enable customers to transfer financial information in regards to their various financial accounts to any entity which requires access to FIU. AA Master Direction states that there are 19 categories of &#8216;financial information,&#8217; which spans varied types of information, including insurance policies, mutual fund units, insurance policies, bank deposits, and balances under the National Pension System.<\/p>\n\n\n\n<p>For sharing financial information, the FIU must initiate a\nrequest for consent, which must include details of the categories of\ninformation that are required by way of any platform or mobile application run by\nAccount Aggregators. <\/p>\n\n\n\n<p>The customer must receive a request from an account\naggregator to share the information once the customer&#8217;s consent is duly acquired.\nAlso, &nbsp;Customers may export data in a structured\nformat. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Responsibilities_of_NBFC-AA\"><\/span>Key Responsibilities of NBFC-AA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One of the prime responsibilities of any &nbsp;NBFC Account Aggregator is to capture information\nof NBFC customers with their explicit consent and to disseminate it. Some of\nthe other duties and responsibilities of the NBFC-AAs&nbsp; as laid down by the RBI are: <\/p>\n\n\n\n<ul><li>To obtaining customer\u2019s &nbsp;consent<\/li><li>In-principle approval to perform such activities<\/li><li>Conducting methods of proper customer identification<\/li><li>For the protection of customer\u2019s rights laid\ndown Citizen\u2019s Charter <\/li><li>Safeguarding financial information of the customers<\/li><li>To ensure that no information will get retrieved\nor transferred without obtaining &nbsp;proper\nconsent of the customer&nbsp;<\/li><\/ul>\n\n\n\n<p>The NBFC aggregator is bound to execute their duties actively\nto retain their licenses. Now you must be wondering about the process of\nattaining the Certificate of Registration&nbsp;for operating the activities\nof AA. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_Account_Aggregator_Registration\"><\/span>Process of Account Aggregator Registration <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>RBI regulates every part of NBFC-AA, thus, the Reserve bank of India also carries its registration. In the registration process of such an entity shall not have any customer interface or hold public funds. If you are interested in getting a certificate of NBFC-AA (NBFC Account Aggregator) registration, then you need to undertake the following&nbsp; steps:<\/p>\n\n\n\n<ul><li>The first step involves company registration according to the Companies Act, 2013<\/li><li>Secondly, the company must ensure to have appropriate resources to provide such type of services.<\/li><li>For undertaking the business of Account Aggregator, the company needs to arrange an adequate capital structure.<\/li><li>Give an assurance that the general character of your management is not prejudicial to the public interest.<\/li><li>It is mandatory to obtain the Certificate of Registration (CoR) from RBI to carry the activities of Account Aggregators.<\/li><li>To obtain CoR, an applicant requires to send an application to the RBI.<\/li><li>The minimum requirement of Rs. 2 crore is compulsory.<\/li><li>The applicant needs to equip with an information technology-driven system to carry out services of <strong>account aggregation<sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Account_aggregation\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>.<\/li><li>The promoters of the NBFC-AA must be fit and proper as per RBI.<\/li><li>Lastly, the leverage ratio should not exceed seven times. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Data_Security_Norms_for_Account_Aggregators\"><\/span>Data Security Norms for Account Aggregators<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is indispensable for NBFC-AA to embrace an entirely IT infrastructure to carry the financial information of various customers. They are solely responsible for the safe storage &amp; transfer of data from FIPs to FIUs. Moreover, they have to give a guarantee that the customer credentials cannot be retrieved or stored in their system because they follow strict security norms.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/semi-closed-wallet-license\/\">Semi-Closed Wallet License<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>On 3rd March 2016, the Reserve Bank of India had sought shareholders\u2019 comments on the \u201cDraft Regulatory Framework for Account Aggregator Companies to promote Consolidated Viewing of Financial Asset Holding.\u201d It foresees the formation of a new class of NBFC (Non-Banking Financial Companies) known as NBFC Account Aggregator. In the advancement of this framework, RBI [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":6848,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[89,544],"tags":[998],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6847"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=6847"}],"version-history":[{"count":13,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6847\/revisions"}],"predecessor-version":[{"id":17167,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/6847\/revisions\/17167"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/6848"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=6847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=6847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=6847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}