The Account Aggregator (AA) ecosystem has got a major boost as all the public sector banks (PSU banks) in the country have onboarded the platform, according to a tweet by Sahamati, a non-profit collective of the framework, bringing over 1 billion accounts on the AA framework.
While many private sector and some public sector banks had gone live on the AA framework, some of India’s largest PSU banks including State Bank of India (SBI), Canara Bank, Punjab National Bank (PNB) and Indian Bank among others, were yet to onboard the platform until July. Finance minister Nirmala Sitharaman had reportedly instructed these banks to go live on the AA framework by end of July.
The participation of major PSU banks is key to the success of AA’s framework as it will open a window for a huge pool of the banks’ customers to use the framework and allow easy access to financial services. Today, these PSU banks cater to a large chunk of India’s population.
In January, Moneycontrol reported that SBI was working on a pricing model because the bank wants to be compensated as it will be the largest information provider. The bank was also working on the infrastructure needed to manage and share the huge pool of data it possesses as the data is supposed to be accessed from its core banking system, which will require additional levels of security and audits.
What is AA framework?
The AA ecosystem 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 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. FIUs and FIPs must be registered with and regulated by any of the four regulators – RBI, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA).
Companies including CAMFinServ, Perfios Account Aggregation Services, Yodlee Finsoft, NESL Asset Data, Finsec AA solutions have received approval from the RBI to operate as AAs.
Additionally, players like PhonePe, Setu, and Tally, among others have received an in-principle nod from the RBI.
In April, India’s market regulator the Securities and Exchange Board of India (SEBI), had said that it will also join the AA framework.
Currently, all PSU banks are working with one AA each, while private sector banks are working with all AA service providers. Eventually, PSU Banks too are expected to work with all companies offering AA services to ensure that customers have the option to choose which AA's app they wish to use.
