SEBI To Soon Join India’s Account Aggregator Framework

The Securities and Exchange Board of India (SEBI) would soon join India’s Account Aggregator (AA) framework.

SEBI chairperson Madhabi Puri Buch said on April 30 that the Indian capital and securities market regulatory body is now in the implementation stage of joining the AA framework where it is exchanging data formats and Application Programming Interface (API) formats for its market participants.

“The entire training system, depository system as well as the entire mutual fund system will soon be online in the aggregator system,” Buch said.

Buch made the announcement while speaking at the Manthan Ideathon virtual event hosted by SEBI. Infosys cofounder and chairman Nandan Nilekani and Protean eGov Technologies MD and CEO Suresh Sethi were also present at the event.

What Is Account Aggregator Network?

The AA framework is a type of Reserve Bank of India (RBI) regulated entity that helps an individual securely and digitally access and share information from one financial institution where they have an account with to any other regulated financial institution in the AA network. 

Conceptualised in 2014 and unveiled in September last year, the financial data-sharing system is aimed at giving millions of consumers greater access and control over their financial records and expanding the potential pool of customers for lenders and fintech companies.

The AA value chain includes financial information providers (FIP), which are banks, asset management companies, pension funds, among others, and financial information users (FIU), which are companies that leverage this data to provide services. 

In the AA ecosystem, the FIUs and FIPs must be registered with either the RBI, SEBI, Insurance Regulatory and Development Authority (IRDAI) or Pension Fund Regulatory and Development Authority (PFRDA). Entities need to be ready to share data as FIPs before they can apply to be FIUs.

Some major private banks such as ICICI Bank, Kotak Mahindra Bank, Axis Bank and HDFC Bank are already live as FIPs and FIUs on the AA ecosystem.

As per an April 29 report, the Union Bank of India became the first public sector lender to go live on the AA ecosystem.

SEBI joining the AA framework will be a major boost to the objective of having all financial data available on a single platform. 

Often identified as the unified payments interface (UPI) moment for the lending sector, the AA framework is seen as a system that can help streamline lending infrastructure, much like UPI revolutionised digital payments.