India has over 572.2M internet users as of 2021. The increase in
technological usage gave rise to a new revolution in India. It is India's
finance technology that has been rising since the 2000s. Recently, the whole
digital payment system saw a massive spike with the introduction of UPI (United
Payments Interface). UPI is now used by most Indians and has given transparency
to the payment system. It is widely accepted in almost all the stores now. India
has seen a surge of 86%, and there are over 300 million active and registered
users of UPI  .
Similarly, to bring transparency and better access to the user's financial
information, India launched another revolutionary infrastructure called the
"Account Aggregator Framework" in September 2021. This framework makes the
lending process easy, and it also aims to let the individual quickly access it.
They can share it anytime, anywhere with the intended third parties (Banks/NBFC).
What is Fintech?
Fintech is simply financial technology. This sector is well regulated as it is a
matter of an individual's financial privacy. Any technology that improves the
automation and infrastructure of financial services in the country is called
fintech. It includes the way businesses transact, digital money wallets, digital
There are 4 categories of users of a fintech:
- B2B banks
- Business clients
- B2C for small businesses.
Take the example of mobile banking. Any company that has provided its services
to improve the consumer experience and has provided innovations in the
traditional structure of financial services is a fintech.
Take an example of Phonepe, PayPal. They are fintech companies. India's Fintech
segment has also seen exponential growth in funding; investments worth more than
US$8 billion were received across various stages of investment in 2021.
These companies provided a lot of services to the country's financial sector.
Thanks to fintech, you can now transfer money to your friend via any medium
instead of the whole traditional process of visiting banks for every issue.
There are 2100 Fintech companies in India, and more than 67 percent of these
have been set up in the last five years.
Role of RBI in the Regulation of Financial Sector
RBI (Reserve Bank of India) is the regulator and the supervisor of the overall
financial system in the country. It is the Central Bank of India. The roles of
RBI include the circulation of money, protecting the nation from hyperinflation,
protecting the interest rates, providing banking alternatives, etc. RBI is the
issuer of currency in the country. It controls all the banks in the nation. RBI
creates the policies like monetary policy, fiscal policy. RBI also regulates the
financial activities in the nation. For any fintech to operate in the country,
the Central Bank should permit it by creating a valuable framework for that
technology's operations and performance in the nation.
The RBI launched the OCEN (Open Credit Enablement Network) in July 2020, which
gave small-scale businesses an easy credit procedure. AA also works through OCEN
to provide individuals with easy availability of loans.
Imagine a person "P" who needs a home loan from bank A. He holds 2 bank
accounts. To obtain a loan from the Bank, P needs his bank account statements
from both of his accounts of Bank A, Bank B. P needs to show the Bank his
insurance, Mutual fund holdings to assure that he can make the timely repayment.
The RBI has introduced the Account Aggregator system to skip the whole process
by digitally sharing the information with Bank A.
What is DEPA?
DEPA ( Data Empowerment and Protection Architecture) is a strategy introduced by
NITI Aayog (National Institute for Transforming India) in August 2020 to empower
people to have seamless, secure, and full access to their data. This framework
gave access to the users to share data with third-party institutions only with
their consent. It is a mechanism that is beyond data protection through PET
(Privacy Enhancement Technology). The goal of DEPA is to make Indians
"data-rich". This framework ensures that only users can have full access to
their data and share it with any third-party institutions based on their
requirements. This framework introduced an Account Aggregator system where
everything happens through an API. And an agreement will be signed by the
entities that share the data.
Sahamati is a self-organized non-profit organization that provides for the
advancement and operation of the Account Aggregator ecosystem. Sahamati believes
that the account aggregator system is India's Open Finance system that drives
users to their destination of data empowerment. It gives certifications for the
entities. Sahamati has been developing technical utilities and various
certificates for the account aggregator system. Sahamati aims to build and
establish an alliance strategy to develop an Account Aggregator. Sahamati
extends the use and promotes the design of AA.
Account Aggregator (AA) Framework
The RBI, on September 2, 2021, introduced the Account Aggregator framework to
the country. It was first seen in the year 2016's government policy. It is
created by regulatory giants like RBI, SEBI (Securities and Exchange Board of
India), IRDAI (Insurance Regulatory and Development Authority), PFRDA (Pension
Fund Regulatory and Development Authority) through FSDC (Financial Stability and
Development Council). This framework gave Indians power over their personal
financial data. This framework created data intermediaries called Account
Aggregators to access users' financial data and provide that to third parties
based on their consent. This system enables the individual to choose between
numerous Account Aggregators through which they want to share the data with the
The framework defined account aggregator and the business of
Account Aggregator as follows:
Section 3(1)(i) - "Account Aggregator" means a non-banking financial
company, that undertakes the business of an account aggregator, for a fee or
Section 3(1)(iv) - "Business of an account aggregator" means the
business of providing under a contract, the service of, retrieving or collecting
information of its customer pertaining to such financial assets, as may be
specified by the Bank from time to time, and consolidating, organizing and
presenting such information to the customer or any other person as per the
instructions of the customer. Provided, the consolidated statement/ report of
the financial assets of customers, and shall not be a property of any Account
Aggregator, for further use. The consolidated statement/ report will be only for
use of the customer.
The framework included two parties, i.e., FIPs and FIUs. They are Financial
Information Providers and Financial Information Users.
FIP may be a bank, Mutual Fund house, Insurance Policy provider, Invoice/Tax
platform according to the RBI
FIU might be for the Wealth Management, Personal Finance Management, Robo
Advisors, Cash flow-based Lending(Banks, Non-Banking Financial Company).
The FIPs provide info to the FIU through the Account Aggregators, only with user
consent. Let's look at the process of the AA.
The process works in this way. First, the individual will sign up to use the AA
services and links his accounts. Next, the FIUs request the Account Aggregator
to send the desired financial information of the individual. The Account
Aggregator then asks the user about the FIUs request and asks the consent to
share that information. Based on their consent, the Account Aggregator decides
to send the encrypted data if he agrees or vice versa.
The personal financial data is private to the individual. The process ensures
the giving of this information with encryption to the FIUs who require the data
to assess the individual's financial credibility. The FIU can then decide
whether to lend the money to the borrower or not. To minimize the risk of data
theft, the process ensures that not even the Account Aggregator can access, view
your data. The conveyed info can only be decrypted by the FIUs. The whole course
of sharing financial data works hassle-free and in a safe and secure way. It
makes the individual not worry about identity theft and cyber fraud.
All the entities to be an Account Aggregator should hold a license issued by the
regulatory body to work as AA. RBI first announced it in 2016. The AAs will be
consent managers for the transfer of financial information. A company to get a
license should make an application in the appropriate format. The company should
check whether it has the resources required for the process of AA. The RBI
evaluates and then issues a Certificate Of Registration (COR) and a valid NBFC-AA
license to the entity. Participation is not made mandatory by the RBI. It is a
voluntary action by the Banks, entities. The in-principle approval given by the
RBI will be valid for 12 months. Within these 12 months, the entity should
create a technological platform that supports AA. After the whole process is
done and verified, the central bank issues a COR for that entity. Currently,
three apps (Yodlee, Phonepe, and Perfios) received in-principle approval from
Which Entities Have Joined The Account Aggregator Ecosystem?
Seven AAs like CAMSFinServ, NESL Asset Data Limited, Finsecc AA Solutions
Private Limited (Product known as OneMoney), Perfiros Account Aggregation
Services Pvt Ltd (Product known as Anumati), have already received approval from
the RBI to move ahead with their AA systems.
Currently, 104 entities are a part of the AA ecosystem in the form of FIPs and
FIUs. They include banks like Axis Bank, ICICI Bank, Induslnd Bank, Kotak
Mahindra, State Bank of India, IDFC, Federal Bank, Karur Vysya Bank, Karnataka
Bank, Central Bank of India. Entities like Bajaj, IIFL, Goalteller, Groww,
Paisabazaar, Policybazaar are also a part of the AA system. Most of them are
still evaluating and implementing the Account Aggregator system, where 14 of the
entities made the Account Aggregator system live.
100K accounts are successfully linked in the running total of accounts linked by
What data is shared with the AAs?
The users can choose to share all their financial data like insurance, Mutual
fund holdings, investments with the Account Aggregators.
Can a user de-link their accounts from the AA?
Yes, a user has full access over his data. He can choose what data he wants to
share and in what way. He can de link a particular account from the Account
Benefits of the Account Aggregator ecosystem
Account Aggregators help individuals share financial data safely without the
requirement of physical documents. Small scale businesses and self-employed
persons find it hard to get credit. The AA system ensures that they can get a
credit based on their GST invoices, securities information, verified statements.
Today, the process of borrowing a loan takes a lot of effort. The submission of
physical documents sharing usernames and passwords will be removed with the AA
system. But for that to happen, banks and entities should join the Account
Aggregator ecosystem as FIPs and FIUs according to their functioning and
relation with the individual. As time progresses, with the ease and security of
the AA system, the fintech landscape changes drastically and helps build a
What is the use of AA when we have CIBIL, PAN?
Mostly, everyone has this question revolving in their minds. Services like
credit bureau (CIBIL score) exist and are helping the financial system of the
country. CIBIL only gives you the credit score based on the repayments, and PAN
only records transactions crossing 50,000 rupees.
A typical bank gives a loan when the person has a credit score of over 750. The
Account Aggregator system aims to bring all the financial transactions the user
makes to a single place that the user can limit and share according to his
requirement. The Account Aggregator system helps a small scale business, an
individual, borrow a loan in a hassle-free way. The registration with the AA can
happen on their app or website. These apps and websites have certifications that
will be issued by the regulatory.
Can you trust an Account Aggregator?
According to RBI, the Account Aggregators are trustworthy and are capable of
doing the sharing job. This is never a breach of the financial privacy of the
individual. Because the sharing happens only when the data is encrypted and
safe. The Account Aggregators can never aggregate your data. They can't see your
information too. The job of an Account Aggregator is simple; they take info from
one institution and give it to the user's intended institution. This process
works only when the user's consent is given.
Do you need to pay for using the Account Aggregator system?
It depends on the Account Aggregator you are thinking of using to share your
data. Some may charge the fee, but it won't be that high. The AA system will be
accessible to every person of every social class.
The RBI (Reserve Bank of India) works in all the ways possible to make the
Indians data-rich. We are safe in the hands of RBI, and all the actions taken by
the RBI will be ensured to work under all circumstances. The Account Aggregator
framework is similar to UPI (United Payments Interface). UPI has changed the way
payment systems used to work. The Account Aggregator system works the same way
but with the data empowerment of the individuals. With AA, you will have the
access to your financial data.