The RBI's move is aimed at facilitating cash flow-based lending to MSMEs
So far, the RBI has issued licences to six account aggregators, with another nine having in-principle approval
Earlier this month, stock market regulator SEBI also joined the network
The Reserve Bank of India (RBI) has brought the goods and services tax network (GSTN) under the ambit of the account aggregator (AA) framework as a financial information provider (FIP).
In a press statement on Wednesday (November 23), the RBI said it has brought the GST network under the account aggregator framework to facilitate cash flow-based lending to micro, small and medium enterprises (MSMEs).
“Department of Revenue shall be the regulator of GSTN for this specific purpose and Goods and Services Tax (GST) Returns, viz. Form GSTR-1 and Form GSTR-3B, shall be the Financial Information,” the RBI said.
To adjust for the GST, the RBI would be adding new clauses to three paragraphs under Section 3 of the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016.
Under the Master Direction, an FIP means a bank, banking company, non-banking financial company (NBFC), asset management company, depository, depository participant, insurance company, insurance repository, pension fund and now GST as well.
An FIP would serve as a data repository for an account aggregator, though the data with it can only be accessed by an aggregator. The aggregators are not permitted to store any of the customer data they access via an FIP.
There are several other duties of an FIP, which include ensuring data security, user authentication and verification and secure data transfer to account aggregators.
By including the GSTN as an FIP, the RBI wants to facilitate cash flow-based lending to MSMEs. The GST network would store the GST data of a company, which will help financial institutions calculate an MSME’s cash flow and extend loans.
Launched in 2021, account aggregators are NBFCs with RBI licences that enable the exchange of financial data between FIPs and financial information users (FIUs). So far, the RBI has issued licences to six AAs in India, with another nine AAs sitting with in-principle approval from the central bank.
The Indian government has been pushing for faster adoption of the AA network, with the finance minister earlier urging public sector banks to join the network on priority. Earlier this month, the stock market regulator the Securities and Exchange Board of India (SEBI), too, joined the network.