New Delhi: Customers who are taking loans, insurance service or investing in mutual funds will not be required to do Know Your Customer (KYC), thanks to the Reserve Bank of India (RBI's) account aggregator service.
The account aggregator ecosystem in the country is in a nascent stage and there is a need for its orderly growth, Reserve Bank of India's deputy governor M Rajeshwar Rao said last week.
What are Account Aggregators?
Account Aggregators (AA) are entities that enable financial data sharing from Financial Information Providers (FIPs) to Financial Information Users (FIUs), based on the consent from the customers. AA acts as an intermediary and helps connect the customer to multiple Financial Information Providers (FIPs) through standardised API (Application Programming Interfaces).
Account Aggregators that have received approval from RBI
Some of the account aggregators that have received approval from RBI include CAMSFinServ, Cookiejar Technologies Pvt Ltd, FinSec AA Solutions Pvt Ltd and NSEL Asset Data Ltd, among others.
Which entities can participate in the AA ecosystem?
Companies registered and regulated by any of the 4 regulators – Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) can be a FIP or FIU.
Benefits of Account Aggregators?
Account aggregator frameworks also benefit the users as they get access to the financial information of potential customers on a real-time basis, reducing the turnaround time for the provision of financial services, Rao said.
"The account aggregator ecosystem is still in a nascent stage of development. But given the sensitivity of the platform on account of the nature of data handled by it, it becomes imperative to ensure that the growth is orderly," Rao said while speaking at iSPIRIT Foundation event.
The deputy governor said as the business of account aggregators grow, it is feasible for different categories of financial institutions, under the jurisdiction of different financial regulators, to talk to one another over their respective technology based platforms.
The larger goal of the account aggregator is to empower customers and reduce information asymmetry. It is aimed at ensuring that the customer has full control over the information that is being shared through the account aggregator, he said.