The Role of Account Aggregator Framework in Financial Empowerment

ACCOUNT AGGREGATOR FRAMEWORK AND ITS IMPACT ON FINANCIAL EMPOWERMENT

The Account Aggregator (AA) framework represents a shift from institutional control to individual data ownership. It allows citizens to share their financial data securely with authorised entities for loans, investments, or other financial services — only with their consent.

1. What is the Account Aggregator (AA) System?

An Account Aggregator is a non-banking financial company (NBFC-AA) regulated by the Reserve Bank of India (RBI). It functions as a consent manager that facilitates safe transfer of financial data between entities but does not store or view the data itself.

2. Regulatory Framework

Regulator: Reserve Bank of India (RBI)

Legal Basis: RBI Master Directions on NBFC-Account Aggregators (2016)

Policy Enabler: The Financial Data Management Centre (FDMC) and Data Empowerment and Protection Architecture (DEPA) under NITI Aayog support this framework.

3. How the System Works

When an individual applies for a loan or investment, they can use an AA app to share data (such as income, bank transactions, or tax records) with the lender by giving electronic consent.

Financial Information Providers (FIPs): Banks, mutual funds, insurance companies

Financial Information Users (FIUs): Lenders, wealth managers, fintechs

Account Aggregators (AAs): Act as intermediaries managing user consent

All data flows are encrypted end-to-end, and consent can be withdrawn anytime.

4. Practical Examples

Personal Loan Application: A small business owner applies for a working capital loan. Through an AA (like CAMS FinServ or NESL AA), they share six months of transaction history from multiple bank accounts directly with the NBFC. The process takes minutes, without submitting physical statements.

Investment Advisory: A wealth manager requests access to a client’s bank and mutual fund data to suggest better asset allocation. The client authorises access through an AA for a limited period.

Credit Inclusion: A street vendor or gig worker without formal documents can share digital transaction records (like UPI history) via AA to qualify for microcredit.

5. Scale of the AA Ecosystem

17 licensed AAs (including CAMS FinServ, NESL AA, Perfios AA)

650 FIUs and 150 FIPs onboarded

160 million accounts connected

Over 3.66 billion data requests processed

6. Benefits

• Empowers individuals with control over personal financial data
• Enables faster and more transparent lending decisions
• Promotes inclusion by allowing credit access based on verified digital data
• Reduces paperwork and data duplication across financial institutions

7. Future Directions

The AA model is being explored for expansion into healthcare, telecom, and education finance, making it the foundation for India’s broader digital public infrastructure.