Account aggregator ‘interoperability’:What RBI’s move means for asset statement

UPSC Syllabus: Gs Paper 3- Indian Economy

Introduction

The Reserve Bank of India (RBI) has allowed interoperability among account aggregators to simplify financial data sharing and provide individuals with a consolidated view of their financial assets. The initiative will also enable SEBI-regulated depositories to include bank deposit information in consolidated account statements. Both measures are expected to be implemented by 31 December 2026.

What Are Account Aggregators and Interoperability?

1. Account Aggregators (AAs): These are regulated financial technology platforms classified as non-banking financial companies (NBFCs) that enable the secure sharing of customers’ financial data between institutions with their explicit consent.
2. Role in Financial Data Sharing: They transfer encrypted information from financial information providers, such as banks, to financial information users, such as lenders, without storing, reading or processing customers’ data.
3. Meaning of Interoperability: It allows customers to access and share financial information across different account aggregators through any one platform of their choice, reducing fragmentation in the financial data-sharing system.
4. Existing Fragmentation: Around 15–17 account aggregators operate separately, while consolidated account statements generally provide information on either bank deposits or investments held through demat accounts.

Key Changes Introduced by RBI

1. Interoperability Among Account Aggregators: Customers will be able to access and share financial information across different account aggregators through a single aggregator, reducing dependence on separate platforms.
2. Integration of Bank Deposits into CAS: RBI will facilitate Securities and Exchange Board of India (SEBI)-regulated depositories in including bank deposit information in the Consolidated Account Statement (CAS) provided to demat account holders.
3. Linking Banking and Investment Information: Customers will be able to link bank accounts with demat accounts and access consolidated financial information through their chosen account aggregator.
4. Implementation Timeline: Both measures are expected to be implemented by 31 December 2026, with initial coverage limited to banks already onboarded to the system.
5. Coordination Between Regulators: The reform requires coordination between RBI, which regulates banking activities, and SEBI, which regulates securities depositories, to integrate information from both financial systems.

What Are the Major Benefits?

1. Consolidated View of Financial Assets: Investors will be able to access information on bank deposits, stocks, mutual funds, bonds and other covered financial instruments through a more integrated system.
2. Simplified Investment Tracking: A consolidated financial overview will reduce the need to check separate statements and platforms, making it easier for individuals to monitor their holdings.
3. Identification of Overlooked Deposits: Access to consolidated financial information may help families identify bank deposits that might otherwise remain unnoticed after an account holder’s death.
4. Faster Loan Processing: Interoperability will make verified financial information easier to share with lenders, reducing fragmentation and helping them complete the loan assessment process more efficiently.
5. Better Cash-Flow-Based Lending: Lenders can assess borrowers’ actual cash flows and financial behaviour rather than relying mainly on traditional credit scores, collateral or information submitted by borrowers.
6. Improved Credit Access for MSMEs: Micro, small and medium enterprises (MSMEs) and first-time borrowers could benefit from better access to formal credit, shorter processing times and more accurate assessment of credit risk.

Way Forward

1. Expand Bank Coverage: The facility will initially cover banks already onboarded to the system, with other banks to be added over time. Bringing more banks into the framework will improve access to financial information across institutions.
2. Integrate Insurance Information: The Insurance Regulatory and Development Authority of India (IRDAI) could work with RBI and SEBI to include insurance policies in consolidated financial statements in the future.
3. Strengthen Financial Data Sharing: Wider participation across financial institutions and continued coordination among regulators can reduce fragmentation and make verified financial information more accessible to customers and lenders.

Conclusion

RBI’s interoperability initiative is an important step towards a consolidated view of financial assets. By linking bank deposit information with investment statements, it can simplify asset tracking and improve access to verified financial data. Wider bank coverage and future integration of insurance information can strengthen this system, while easier data sharing can support faster lending and broader access to formal credit.

Question for practice:

Discuss how the Reserve Bank of India’s move to introduce interoperability among account aggregators can benefit investors and improve access to credit.

Source: Indian Express