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.

Reference

PIB| Account Aggregator Ecosystem.