SEBI joins hands with the Account Aggregator Framework to enhance the accessibility of financial information.
Highlights of the news
The RBI-regulated non-banking financial institution (NBFI) constitutes the account aggregator framework.
The account aggregator paradigm simplifies the process for financial information suppliers (FIP) to acquire or accumulate financial data about a consumer.
The structure for account aggregators is centered on the customer's explicit approval.
The FIPs in the securities market will ensure that financial information is available through whatever account aggregators are registered with the RBI using the account aggregator mechanism.
In light of this, the account aggregator and FIPs in the securities market will constitute a contractual mechanism to generate an account aggregator environment.
Federal information processing is entities that have exposure to a customer's financial information which includes Depositories, banks, AMCs as well as pension funds.
Financial information users (FIUs) can easily access them as a "source" of personal or business-related data by accepting suggestions through an aggregator.
As a consequence, these are organizations that aim to utilize this information to deliver financial commodities and services to their ultimate consumers.
Exposure to the Financial Information acquired after collaborating with the Account Aggregator Framework
In accordance with the statement claimed by the Sebi, the FIPs in the securities market are entitled to disclose "financial information" to individuals if they volunteer to receive this information by using one of the account aggregators listed with the RBI.
Whilst entering into a contractual framework with the aggregators, FIPs in the SEBI market will also be expected to outline each party's rights and responsibilities in addition to the modalities of a process for resolving disputes (account aggregator framework).
The September 2021 introduction of licensed NBFCs classified as account aggregators facilitated the simultaneous interchange of financial data amongst FIP and FIUs. It is their responsibility to provide operations that necessitate the transfer of consumer information however not its retention.
The Sebi circular concentrates its efforts on confidentiality.
Recently, following all 12 public sector banks joined, over a billion accounts joined the account aggregator structure. There seem to be numerous privately owned banks in the network.
As per the sources, 998,262 consents have been granted throughout the same time frame that almost a million users had already been registered to the account aggregator architecture.
The GST Network will debut on the account aggregator architecture within a few months. The ecosystem is also beginning to be intertwined with insurers and pension plans.
Last but not the least, due to the fact that clients will be able to share information about their mutual fund and stock portfolios with financial service providers including wealth managers, Robo advisors, brokers, and lenders thanks to SEBI's cooperation in the framework, the Reserve Bank of India-regulated financial data sharing system is expected to see tremendous growth.