Account Aggregator (AA) framework

Context

The Account Aggregator (AA) framework has seen more than eight-fold spurt in the number of bank accounts linked across the last 20 weeks.

What is an Account Aggregator (AA)?

• The account aggregator, simply put, facilitates sharing of financial information in 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).
• FIPs are institutions that hold customer data and FIUs are entities that consume data to offer better service, underwrite loans, etc. 
• An AA is data blind and only receives encrypted data which is decrypted only by the FIU.

What can be linked to AAs?

• As of now, only individual current and savings accounts and deposits can be linked to AAs. 
• The huge pool of small and medium enterprise (SME) accounts and asset classes like securities, insurance and mutual funds need to be opened up to AAs. 

The growing numbers

• According to data by Sahamati, the not-for-profit self-organized collective for the AA ecosystem, the number of linked bank accounts has gone up from 10,000 in the second week of September 2021 to 80,000 now. 
• The ecosystem has fulfilled 67,000 consent requests till date.

Which banks are on board currenlty?

• Six banks are live on the ecosystem, including Axis Bank, Federal Bank, HDFC Bank, ICICI Bank, IDFC First Bank and IndusInd bank. 
• Eleven more NBFCs and investment advisors too are live as FIPs and FIUs.
• The ecosystem is still waiting for India’s largest lender, the State Bank of India (SBI), to go live.
• SBI, however, is working on a pricing model because the bank wants to be compensated as it will be the largest information provider.
• Once SBI goes on board, other large public banks too will follow suit.