How to Start a NBFC ACCOUNT AGGREGATOR LICENCE

service package

Overview of NBFC Account Aggregator License

NBFC Account Aggregators (NBFC-AAs) are entities that facilitate the sharing of financial data across various financial institutions, acting as "consent brokers." They enable the transfer of data between financial organizations with the user’s consent. The Reserve Bank of India (RBI) introduced this model in September 2016, creating a new class of NBFCs called Account Aggregators, with guidelines for their operations.

What is Account Aggregation?

Account aggregation involves collecting and presenting financial data from multiple accounts on a single platform. These can include bank accounts, investment accounts, business accounts, and other financial-related accounts.

Account Aggregators help transfer structured financial data from Financial Information Providers (FIPs) to Financial Information Users (FIUs) with the user's consent. Users have control over their data, including the right to grant or revoke consent for sharing their financial information.

  • Financial Information Providers (FIP): These are entities that provide a user's financial account details upon request.
  • Financial Information Users (FIU): These entities, such as banks or financial institutions, use the shared data for various purposes like market analysis or customer profiling.

Role of NBFC Account Aggregators

An NBFC Account Aggregator consolidates data from various financial institutions that a customer is associated with. It organizes and presents this information in a structured format that allows for easy access and retrieval. NBFC-AAs enable customers to give or revoke consent for their data to be shared across multiple platforms.

They act as intermediaries between FIPs and FIUs, ensuring the transfer of financial data based on user consent. This process is similar to the authorization mechanism used in platforms like UPI (Unified Payments Interface), where the user authorizes the sharing of their data.

Types of Financial Information Shared

As defined by the RBI's master directions, financial information includes:

  • Bank deposits
  • Mutual funds
  • SIP (Systematic Investment Plan)
  • Bonds, debentures, and ETFs (Exchange-Traded Funds)
  • Collective Investment Scheme (CIS) units
  • Insurance policies and pension plans
  • Investments with NBFCs
  • Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)

Importance of NBFC Account Aggregators

NBFC-AAs play a crucial role in providing customers with a clear overview of their financial assets. Customers often struggle to get a complete picture of their investments, such as mutual funds, insurance, or fixed deposits. An NBFC-AA helps standardize and organize this data into a unified platform.

Key benefits of NBFC-AAs include:

  • Enhanced transparency and uniformity of financial data.
  • Protection against data abuse through consent-driven data sharing.
  • A reliable platform for customers to manage and share financial data.

Duties and Responsibilities of NBFC Account Aggregators

NBFC-AAs have specific duties to ensure customer protection and proper service delivery:

  • Providing services only with the customer's explicit consent.
  • Ensuring agreements between the customer, NBFC-AA, and FIPs are in place.
  • Ensuring data is shared only with the authorized FIUs or the customer themselves.
  • Avoiding involvement in any business other than account aggregation.
  • Implementing measures to safeguard customer documentation and financial data.

Account Aggregators are prohibited from holding onto the financial data they share and must comply with all regulations laid out by the RBI. They are required to operate with integrity, ensuring transparency, data security, and customer consent in the aggregation process.

Final Notes

While NBFC-AAs have streamlined the sharing of financial data and improved transparency, it is essential for the RBI to continue strengthening regulations to prevent the misuse of financial data. This will help mitigate risks and enhance the quality and security of data shared across platforms.

Requirements for Obtaining an NBFC-AA License

To obtain an NBFC Account Aggregator (NBFC-AA) License, a company must have a minimum Net Owned Fund (NOF) of Rs. 2 crores. After receiving principal approval from the Reserve Bank of India (RBI), the company will have a 12-month period to raise the required capital. During this period, the NBFC-AA is only permitted to engage in account aggregation activities and cannot provide any other services.

NBFC-AA is responsible for sharing customer financial data with authorized financial users. However, unlike other NBFCs, it is not allowed to engage in fund-based activities. Additionally, NBFC-AAs cannot use the customer’s financial data for any purpose other than aggregation.

Once approved by the RBI, the NBFC-AA must complete all necessary technological infrastructure and establish required partnerships within 12 months to begin operating as an account aggregator.

As per RBI guidelines, entities that aggregate accounts in specific sectors regulated by other authorities may be exempted from seeking RBI approval. However, these entities are also restricted from conducting financial activities typical of other NBFCs.

How to Obtain an NBFC Account Aggregator License in India?

  1. Company Registration: The first step is to register the company under the Companies Act, 2013.
  2. Resources and Infrastructure: The company must have the necessary resources and infrastructure to provide account aggregation services.
  3. Capital Structure: The company must be prepared with an adequate capital structure to undertake the business of account aggregation.
  4. Management Integrity: The management should demonstrate a commitment to the public interest and must not have any conflicts of interest.
  5. Certificate of Registration (CoR): Obtaining a CoR from the Reserve Bank of India (RBI) is mandatory for operating as an account aggregator.
  6. Application to RBI: The company must apply to the RBI to obtain the CoR for account aggregator activities.
  7. Minimum Net Owned Fund: The company must have a minimum of Rs. 2 crores in Net Owned Fund (NOF).
  8. IT Systems and Data Framework: The company must have a robust IT and data infrastructure in place to effectively carry out account aggregation services.
  9. Leverage Ratio: The leverage ratio must not exceed 7 times.
  10. Fit and Proper Promoters: The promoters of the NBFC-AA must be deemed fit and proper as per RBI guidelines.
 
 

Revocation of NBFC Account Aggregator License

The RBI-DNBR may revoke the NBFC Account Aggregator License under the following conditions:

  1. The company ceases to operate as an Account Aggregator in India.
  2. The company fails to meet any condition under which the Certificate of Registration (CoR) as an Account Aggregator was granted.
  3. The RBI determines that the company no longer qualifies to hold the Certificate of Registration.
  4. The company violates any conditions essential for maintaining the Certificate of Registration.
  5. The company fails to:
    • Comply with the directions issued by the RBI.
    • Maintain or disclose accounts and financial information as per RBI's requirements or applicable laws.
    • Provide its books of accounts or other relevant documents for inspection by the RBI.