Why in the news?
- On September 2, 2021 eight major banks in India — State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank and Federal Bank — joined the Account Aggregator (AA) network.
Objectives
- It promises to consolidate all financial data of users in one place and extend credit services to them based on that information rather than depend on collateral.
What are Account aggregators ?
- An Account Aggregator (AA) is a non-banking financial company engaged in the business of providing, under a contract, the service of retrieving or collecting financial information pertaining to its customer.
- It act as an intermediary to collect and consolidate data from all Financial Information Providers (FIP) that hold users’ personal financial data like banks and share that with Financial Information Users (FIU) like lending agencies or wealth management companies that provide financial services. F
How it was created?
- The AA framework was created through an inter-regulatory decision by RBI and other regulators.
- The licence for AAs is issued by the RBI, and the financial sector will have many AAs.
Significance
- An Account Aggregator reduces the need for individuals to wait in long bank queues, use Internet banking portals, share their passwords, or seek out physical notarisation to access and share their financial documents.
(Source: IE)
