Prelims – Current events of National and International importance| Economic and Social Development.
Why in News?
Recently, Celebrating four years of launch of the Account Aggregator Ecosystem, India’s Digital Public Infrastructure (DPI).
Account Aggregator (AA) ecosystem – It is a part of India’s digital public infrastructure, designed to give individuals and businesses secure and consent-based access to their financial data.
The Reserve Bank of India issued the Master Directions for the Account Aggregator (AA) ecosystem.
Account Aggregator (AA) framework –It was officially launched on September 2, 2021, establishing a secure, consent-based system for financial data sharing.
It allows users to aggregate their financial information (like bank accounts, investments, loans, etc.) from multiple sources and share it with service providers for services like loan applications or financial planning.
Account Aggregator (AA) – It is a type of Non-Banking Financial Company(NBFC) regulated by RBI .
They act as intermediaries, ensuring data privacy and user control through encrypted, permission-driven data sharing.
Function - It helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network.
DPI - AA was recognised as a foundational Digital Public Infrastructure (DPI) serving as the data exchange layer, complementing the identity (Aadhaar) and payments (UPI) layers.
AA Network - As on date, 112 Financial Institutions have gone live both as Financial Information Providers (FIP) and Financial Information Users (FIU), while 56 have gone live solely as FIP and 410 as FIU.
Financial Information Provider (FIP) – These are institutions entrusted with the role of safeguarding customer’s data.
Example - Banks, NBFCs (Non-Banking Financial Companies), Mutual Fund Depositories, Insurance Repositories, Pension Fund Repositories etc.
FIU - It is an entity registered with and regulated by any financial sector regulator.
It consumes the data from an FIP to provide various services to the end consumer.
Significance –The AA ecosystem is poised to unlock new frontiers in formal credit access, especially for MSMEs and personal lending.
