What is an "Account Aggregator" ?

Eight of India's major banks joined the Account Aggregator (AA) network that will enable customers to easily access and share their financial data.

An Account Aggregator is a non-banking financial company engaged in the business of providing, under a contract, the service of retrieving or collecting financial information pertaining to its customer.

It is also engaged in consolidating, organising and presenting such information to the customer or any other financial information user as may be specified by the bank.

The AA framework was created through an inter-regulatory decision by RBI and other regulators including SEBI, IRDA and PFRDA through and initiative of the Financial Stability and Development Council (FSDC).

The licence for AAs is issued by the RBI, and the financial sector will have many AAs.

The AA framework allows customers to choose what financial data to share and with which entity.

Data transmitted through the AA is encrypted.

AAs are not allowed to store, process and sell the customer's data.

It has a three-tier structure: Account Aggregator, FIP (Financial Information Provider) and FIU (Financial Information User).

An FIP is the data fiduciary, which holds customers' data. It can be a bank, NBFC, mutual fund, insurance repository etc.

An FIU is a consumer that wants access to the borrower's data to determine if the borrower's data to determine if the borrower qualifies for a loan.

Banks play a dual role - as an FIP and as an FIU.