How the New Account Aggregator System Can Benefit You

What are Account Aggregators?

Account aggregators are entities licensed by the Reserve Bank of India (RBI) to collect and share financial information. When you apply for a bank loan, you can ask an account aggregator to collect information about all your bank accounts or other assets and submit it to the lender. This can establish your eligibility for the loan. Since the account aggregator gets the information directly from a financial institution, it will be considered authentic and the lender need not worry about fake documents. This is all done electronically, reducing the cost and time for physical paperwork.

How does the system work?

The account aggregator system consists of three components: the financial information user (FIU), the financial information provider (FIP), and the account aggregator. FIU requests the data, FIP provides it, and the aggregator is the intermediary acting under your instructions. You sign up on the aggregator’s platform and link your bank accounts and other financial records to it. Thereafter, you authorize third parties who are on-boarded, such as the FIU, to receive the information for the purpose you have in mind. For example, your wealth manager may be a FIP and may need to receive quarterly statements of all your investments.

What will the new system cost you?

The aggregator can either charge you or the FIU (Data User). The cost will be determined by each aggregator individually. However, these are likely to be reduced due to the online nature of the system. In some cases, they may deduct the charges that you already incur at the time of information verification. Take loan processing fees, for example.

What about confidentiality and consent?

The idea behind the new system is to enable you to give informed consent to share data. This will allow you to share specific information for a specific period of time. For example, you authorize the aggregator to share your bank account details for a particular account for the last three years with a lender. The information being shared will be limited to that bank account and the time period mentioned. You will also have redressal options in case your information is shared without your consent.

Where is this system going?

While this is currently confined to areas under four regulators- RBI, SEBI, Irdai and PFRDA, talks are on to add more sources of information such as goods and services tax and income tax. These can help in areas such as loan approval and money management. For example, a tap of the finger can allow the aggregator to share your verified income tax return with the bank you have approached for a loan. Eventually, documents like COVID-19 vaccination certificates can also become part of the system.