Indian market regulator the Securities and Exchange Board of India (SEBI) will soon join the account aggregator (AA) framework, chairperson Madhabi Puri Buch said on April 30.
SEBI joining the framework will 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.
"SEBI indeed will be joining the account aggregator system. We are now in the implementation stage where we are exchanging data and API formats for our market participants. So, the entire repository and mutual fund systems will soon be online on the framework," Buch said.
NSDL, CDSL, CAMS and KFintech will be key data providers for the account aggregator ecosystem.
Buch was speaking at the Manthan Ideathon virtual event hosted by SEBI. Infosys co-founder and Chairman Nandan Nilekani, iSPIRIT co-founder Sharad Sharma and Protean eGov Technologies MD and CEO Suresh Sethi were also a part of the event.
SEBI will join #accountAggregator framework soon: SEBI Chairperson Madhabi Puri Buch during SEBI Ideathon today @NandanNilekani pic.twitter.com/GkI5i4e9rqRelated stories
— Sahamati (@sahamati) April 30, 2022
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.
"The ecosystem has eagerly awaited for this announcement from SEBI. Chairperson Madhabi Puri Buch is known to be a strong supporter of the account aggregator framework," said BG Mahesh, co-founder, DigiSahamati Foundation.
"Citizens will benefit immensely from having the ability to share their investment data with their financial providers. Financial investment service providers until now have struggled with the friction they had to deal with to acquire their client's investment data, with NSDL, CDSL coming onboard the friction will be gone."
Until now only individual current and savings accounts are linked to the framework. The next step for the ecosystem is to grow the number of financial information providers (FIPs) and get more banks to go live, mainly the State Bank of India (SBI,) which has the largest share of accounts in India.
To grow the FIP base, Sahamati, which is a not-for-profit self-organised collective for the AA ecosystem, is in talks with insurers to go live on the framework as well.
Union Bank of India became the first public sector to go live on the framework on April 29.
Major private sector banks like HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank are already live as financial information providers and financial information users (FIUs).
Since AA framework went live in September 2021, 332,000 customer accounts have been linked and over 310,000 consent requests fulfilled.
The framework facilitates sharing of financial information on a real-time basis between regulated entities. AAs are licensed by the Reserve Bank of India to enable the flow of data between FIPs and FIUs.
It allows users to have a single view of their consolidated financial information such as savings, fixed deposits, mutual funds, equity investments and insurance, and voluntarily share this with financial institutions to get loans and better deals on other financial products quickly.
FIPs are institutions that hold customer data and FIUs are entities that consume the data to offer better services, underwrite loans, and so on.
Banks and other financial institutions must become FIPs to become users of data from other financial institutions.
An AA is data blind and only receives encrypted data, which is decrypted only by the FIU.
