Sebi joins RBI's Account Aggregator framework to ease access to financial information

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In a big push for India’s lending ecosystem, the market regulator Securities Exchange Board of India (SEBI) said in a circular that it has joined the Reserve Bank of India’s (RBI’s) Account Aggregator framework by allowing depositories, asset management companies (AMCs) and mutual fund houses to become financial information providers or FIPs.

“The FIPs in the securities market will provide the Financial Information, as specified in Clause 3(ix) of the RBI Master Directions, to the customers and financial information users who furnish the consent artifact through any of the Account Aggregators registered with RBI,” SEBI said in a circular dated August 19.

Touted as the UPI moment for lending, the AA framework ensures quick data sharing with the consent of the user and eliminates the need for physical documents.

AAs are licensed by the RBI to enable the flow of data between Financial Information Providers (FIPs) and Financial Information Users (FIUs). The user has to give consent on what data can be shared.

The AA acts as an intermediary and the information comes from FIPs like banks, AMCs, pension funds, etc, and FIUs that consume this data. FIUs, again, can be a bank giving out a loan, an insurance provider, or a wealth manager, among others.

“The FIPs in the securities markets shall share the Financial Information pertaining to securities markets, through the AA only on receipt of a valid consent artifact from the customer through the Account Aggregator,” SEBI’s circular said.

In April, Moneycontrol reported that SEBI’s chairperson Madhabi Puri Buch said that the regulator is planning to join the account aggregator (AA) framework soon.

SEBI joining the framework is said to give a huge impetus to the Reserve Bank of India-regulated financial-data sharing system, as it will allow customers to share information for their mutual fund and stock portfolios with financial service providers such as wealth managers, Robo advisors, brokers, and lenders.

Industry experts also said that this will pave the wave for other regulators like the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority to also get on board sooner.

“What you are likely to see is that we will witness a frictionless and seamless working of mutual funds or AMCs- which will only enhance the financial health of the user,” said an executive from the lending ecosystem requesting anonymity.

The move is said to help users and industries manage and integrate their multiple investments and portfolios.

Currently, all PSU banks are working with one AA each, while private sector banks are working with all AA service providers.