A recent report titled ‘Lending firms using the Account Aggregator (AA) framework’, stated that it facilitated loans worth Rs 42,300 crore from 2021 to March 2024.
About Account Aggregator (AA) framework:
- Account Aggregator (AA) is a Non-Bank Finance Company (NBFC) engaged in the business of providing the service of retrieving or collecting financial information pertaining to the customer.
- No financial information of the customer is retrieved, shared or transferred by AA framework without the explicit consent of the customer.
- AA transfers data from one financial institution to another based on an individual’s instruction and consent, while registering with an AA is fully voluntary for consumers.
- In India, AAs act as consent managers that operate independent of FIUs which allows users and businesses to consensually share their financial data and manage consents at one place.
- AAs use technology to ensure there is a secure exchange of data between financial institutions like banks, insurance agencies or mutual fund companies.
- Account Aggregator network was introduced as a financial data-sharing system by Reserve Bank of India (RBI) when it issued the Non-Banking Financial Company (NBFC) – AA Directions, 2016.
- Entities may enrol themselves on AA framework as Financial Information Provider (FIP)- banking company, NBFC, asset management company, depository, insurance company, etc.
- It can also be done by a Financial Information User (FIU), which is an entity registered with and regulated by any financial sector regulator.
- Lending firms use AA framework for a customer’s loan journey such as onboarding, underwriting, and monitoring of customers.
Key achievements of the AA Framework:
- The Account Aggregator ecosystem has 163 Financial Information Providers (FIPs) across banks, insurance firms, investment, pension and taxes and 475 Financial Information Users (FIUs).
- It facilitated loans amounting to Rs 42,300 crore till March 2024 since its launch before three years.
- During the same period, about 4.22 million loans were disbursed on the platform.
- The cumulative average ticket size of loans facilitated on the framework has been pegged at Rs 100,237.
- 2.12 million loans amounting to Rs 22,100 crore were facilitated on the framework, accounting to nearly half of the lifetime disbursement value and volume on the AA framework.
- This can decrease the transaction costs by 20 to 25% on the AA framework.
- There are 2.12 billion financial accounts, including 1.64 billion bank accounts, in the AA ecosystem.
Ref: Source
| UPSC IAS Preparation Resources | |
| Current Affairs Analysis | Topperspedia |
| GS Shots | Simply Explained |
| Daily Flash Cards | Daily Quiz |
Frequently Asked Question:
What is an Account Aggregator (AA)?
An AA is a non-banking financial company (NBFC) that provides services for retrieving or collecting financial information pertaining to a customer with their explicit consent.
Is registering with an AA mandatory?
No, registering with an AA is entirely voluntary for consumers.
What types of entities can enroll as AAs or FIUs?
Financial Information Providers (FIPs): Banking companies, NBFCs, asset management companies, depositories, and insurance companies.
Financial Information Users (FIUs): Entities registered with and regulated by a financial sector regulator.