Nandan Nilekani has recently launched Sahamati, an account aggregator model so that it can assist individuals and small businesses to share their digital financial data with third parties, but in a secure environment. Hence, someone who is seeking a bank loan will be able to send their bank details and other documents required by the lender over a digital platform based on their choice of the preferred account aggregator or AA. On the other hand, those users who are might be using financial planning services will also be able to share information regarding mutual fund, provident fund, insurance, and banking through the AA app and will also be able to receive data and services from multiple service providers, without having to visit multiple branches physically. All of this will be done via consent-based channels.
This is in light of the RBI approving a new section of NBFCs in 2016 which will be acting as account aggregators and their primary responsibilities will be to provide services only after they have received explicit consent from the clients. This would be pertaining to transfers, but will not store the client’s data.
What else should you know?
Also, the AA will not be able to read the data and it will not be able to resell the data either and will only be able to make money through the transactions made through them. According to the former chairman of the UDI, this digital infrastructure improvement will help small businessman empower themselves with their own data and it will help them with getting better loans. Moreover, Sahamati has been formed as a Section 8 non- profit and it will also help accelerate the adoption of the framework by making this process more known among the potential AAs, FIPs, and FIUs as well. With the help of this new technology architecture, the participants will be made aware of the support and implementation through various workshops.
Sahamati will be headed by B G Mahesh who had founded OneIndia.com along with account aggregator organizations, mutual funds, and banks as well as other financial information users like flow-based credit and wealth management companies, along with personal finance management. It is also slated that Sahamati will apply for the self-regulatory organization license with the RBI and this will provide self-governing status to it. It will mean that they will work according to a code of conduct which will be based on the best practices of the industry. As of now, six AAs have received in-principle approval from the RBI and these would include NESL Asset Data, CAMS Finserv Financial Services, and Cookiejar Technologies among others, like Yodle Finsoft and FinSec AA Solutions. The final RBI license is expected to come by the end of the year and the companies will soon be able to start offering their services, and will also help credit bureaus with calculations, along with helping SMEs and retail customers as well.
How the market will be impacted
The lending of money to SMEs and for personal finance will become much easier through the AAs and GSTN, IT ad bank account statements with user consent are already being used by some. The give-in approval happens in 59 minutes and it is being operated through psbloansin59minutes.com. Using the AAs would also lead to cost efficiency and it can be shared with the customer in terms of the lower interest rate.
Several experts have opined that once the account aggregators start performing well, the infrastructural costs will be much lower as well as the credit cost and it will help with transmissions. On the other hand, any institution that will be using the AA algorithms will be able to access customer data and approach them with loan offers on a real-time basis. Once the other sectoral regulators start coming on board, this model could be extended for them as well, for example, TRAI recommending telecom data and the NITI Aayog has recommended healthcare data. The development of account aggregators and their services has been in the works for some years when the RBI, Insurance Regulatory and Development Agency, Securities and Exchanges Board of India and Provident Fund Regulatory and Development Agency all joined heads to allow for related bodies under their control to share data after the user consent has been achieved and today it will contribute majorly towards consumer benefits.
