NBFC Account Aggregator (NBFC-AA) License

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It is important to grasp the term “Account Aggregator” before moving to the NBFC Account Aggregator permit. Account aggregators are elements of this kind that allow the exchange of financial information through financial institutions rather than maintaining a record and obtaining consent.Any business seeking to register as an account aggregator must have an INR 2 Cores Net Owned Fund.
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NBFC Account Aggregator

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NBFC Account Aggregators are entities that facilitate the sharing of knowledge across various financial sector organizations and act as “consent brokers”, i.e., the intermediate data transfer amongst the financial organizations with the consent of the user. This was declared by RBI in September 2016 stating master directions for a replacement class of NBFC’s called Account Aggregators. NBFC Account Aggregator is those sorts of elements which set about as assent agent who will empower financial information sharing among financial institutions within the money related part. Though, the knowledge must be moved with the assent of the client. This was conceptualized by the RBI within the year 2015. The RBI has announced master directions for Non-Banking Finance Companies – Account Aggregators (NBFC-AA).

NBFC-AA (NBFC Account Aggregator) may be a quite budgetary element that is involved within the process of giving data to NBFC clients identified with accounts held by clients in various NBFCs. Such data are going to be in a united and sorted out way. the info is going to be associated with the financial involvement of the customer with the varied products of NBFC.

To provide a simple understanding, an Account Aggregator is an entity that will pull and consolidate all of an individual’s financial data and present an equivalent in a manner that permits the reader to simply understand and analyze the various financial holdings of an individual. at the present, our financial holdings are scattered across various financial instruments, with various financial intermediaries, which come under the purview of varied financial regulators.

For example, a private may have investments in fixed deposits with ABC Bank which comes under the purview of RBI, open-end fund investments with EFG AMC which comes under the purview of SEBI, and life assurance cover with HIJ Insurance Corporation (which comes under the purview of IRDAI).

Collecting all the scattered data from each of those investments and consolidating an equivalent for submission to a financial organization while applying for a loan, may convince be a time-consuming and rather confusing job for a private. The NBFC-AA structure was preceded with the intent to help individuals get a consolidated aspect of their financial holdings spread across the purview of different financial sector regulators.

Recently we’ve seen a pointy boost within the interest of getting an NBFC-AA license. Ever since the Structure was launched in 2016, around 8 entities have applied for the Account Aggregator License out of which one has been given the Certificate of Registration while the others are granted in-principle. Apart from the above, we’ve seen interest from the new age digital lending or app-based NBFCs.

  • The company must have built a plan to determine if, according to RBI rules, the promoters are suitable.

  • According to the company under the directives, a declaration will be received from the CEO/managing directors/directors.

  • Provide an annual clarification of the change of CEO/directors/managing director properly accredited by the Legislative Auditors within 15 days of the closing of the money-related year regarding the fit and valid requirements.

  • According to the company under orders, an arrangement deed will be received by the managing directors/directors/CEO.

  • With an NBFC-AA (NBFC Account Aggregator) license, a minimum requirement of Rs is required. 2 crore. However, the agency will have a set one-year funding period after receiving extensive approval from the RBI. No services may be provided without NBFC-AA (NBFC Account Link) integration.

  • After obtaining the principal approval from the regulator, NBFC-AA (NBFC Account Aggregator) will have a set time of year to set all the necessary design and binding required to carry out this merger business.

  • According to the RBI, an item found on consolidating financial sector-related accounts held by various regulators may be excluded from obtaining RBI approval. The RBI directs the NBFC-AA (NBFC Account Link).These types of elements are not allowed to pass money-related tests like other NBFCs.

  • NBFC-AA will provide data to financial users in relation to the client. They are not eligible to perform any fund-based activities like other NBFCs. At first glance we can’t really see them as NBFCs. NBFC Account Aggregators cannot use customer financial resources data for any other reason.

We must understand the usefulness of the account aggregator before understanding the NBFC AA license application process. Apart from receiving approval and holding the record in a fixed format, the NBFC Account aggregators are empowered to exchange financial information through institutions. This results in the simple sharing of data from the financial information provider (FIP) to the recipient of financial information (FIU). In the following section, let us understand in-depth these two words.

  • Financial Information Provider (FIP): An Entity giving monetary services regulated under the budgetary area.

  • Financial Information User (FIU): The financial information user can be customers or other NBFCs asking information about holdings of any persons. These institutions comprise RBI, IRDA, SEBI, PFRDA. The monetary information shared among the FIP and FIU is identified and transferred under the master directions provided by RBI’s Department of Non-Banking Regulation (regulatory authority for NBFC AA).

  • Deposits with NBFCs

  • Structured Investment Product (SIP)

  • Commercial Paper (CP)

  • Certificates of Deposits (CD)

  • Government Securities (Tradable)

  • Equity Share

  • Bonds Debentures

  • Mutual Funds

  • Exchange-Traded Funds (ETFs)

  • Indian Depository Receipts

  • Collective Investment Schemes (CIS)

  • Alternative Investment Fund

  • Insurance Policies

The key role of the NBFC-Account Aggregator is to provide data in relation to the accounts kept by customers. In a sorted, combined, and retrievable way, data is stored. It is completely intentional for a customer to appreciate the account aggregator’s services.

The NBFC-AA conducts IT-oriented operations that enable specialized data to be collected by the customer. The primary task of NBFC-AA (NBFC Account Aggregator) is account collection; unlike other NBFCs, they would not go into monetary resource exchange with their customers in this way. An aggregator is authorized to transmit the surplus of investment in instruments and not for exchange. In the Board-affirmed method of the record, the aggregator will pick the administration’s estimate. The rules and methodology adopted by the account aggregator must be open and public space available.

The NBFC-AA (NBFC Account Aggregator) administrations must be aware of the required understanding/between the aggregator, customer and provider of financial services. The terms and states of the permit must be trailed by NBFC-AA (NBFC Account Aggregator) including insurance of customer, complaint redressal, data security, corporate governance, audit control, and risk management system. The Financial Stability and Development Council (FSDC) supports the NBFC-AA option.

Completely, NBFC-AA (NBFC Account Aggregator) collects information about the monetary resources of the business and delivers it in a merged, sorted out and retrievable way to the customers. The RBI drafted a set of rules that must be tracked by these kinds of substances.

  • It will deliver services to customers based on clear customer consent.

  • It must ensure that when providing services, the same will be supported by the relevant Agreement/authorization between NBFC-AA, the customer, and FIP’s.

  • It will not support any customer transactions.

  • It will create appropriate mechanisms to ensure proper customer documentation.
    Information will be shared only by the tempting customer or another FIU, as approved by the customer in accordance with the terms and conditions of the permit.

  • It will not apply to any business other than the NBFC-AA business. Permission, however, is granted for the removal of residual investment in non-commercial trade routes.

  • Consumer financial information accessed from FIP’s will not contain NBFC-AA.

  • No third party services will be used for Aggregator business.

  • It will contain a Citizens’ Charter which clearly guarantees the protection of consumer rights. It will not be separated from any information received by the customer or on its behalf until such time as the customer agrees.

  • In the event of any conflict between the financial statements made by the Aggregator Account and the financial information in the FIP documents, the position indicated in the FIP documents shall prevail.

On the basis of master directions provided by the RBI, NBFC-AA registration is carried out. There will not be public funds and some kind of user interface for this form of substance. The Accompanying Measures should be followed for NBFC-AA (NBFC Account Aggregator) Registration: 

  • The initial phase is the registration of entities under the Companies Act, 2013.

  • To provide certain kinds of services, the company must have the basic assets.

  • The company had made an acceptable strategy of satisfactory capital structure to adopt the matter of account aggregator.

  • The administration’s overall character is not biased by public intrigue.

  • It is necessary to obtain the RBI Certificate of Registration (CoR) to conduct the activities of the account aggregator.

  • For the acquisition of a Certificate of Registration (CoR), an application must be made by the candidate with the RBI.

  • A requirement of at least Rs. 2 crore is available.

  • Equipped with data innovation structure to manage services linked to account aggregation.

  • Promoters of the NBFC-AA need to be fit and legitimate

The company will prepare for a data innovation platform during the legitimacy phase and complete all the legal documentation that is necessary for doing activities. However, RBI can drop the CoR of NBFC-AA on Account Of Non-Compliance: 

  • If the company ceases to transmit the record collection activity.

  • The organization does not comply with the conditions subject to which the RBI has issued the certificate of registration.

  • If it is known that the NBFC-AA  is not qualified to hold a registration certificate, or if it is not eligible to hold a registration certificate.

  • Guidance issued by RBI.

  • Considering accounts.

  • Distribute the money-related condition and uncover it as per the law.

  • Investigation of Account Books.

NBFC-AA must have a legal IT system since they convey a lot of monetary data from various customers. The covered stockpiling and transition of information from money-related data providers to budgetary data customers would be solely responsible for these kinds of elements. They will also need to ensure the customer credentials in their system can not be recovered or stored.

  • Assurance of unapproved entry, modification, degradation, disclosure, or distribution of records and dates.

  • Use the subsequent innovation stage to preserve monetary data.

  • Take crucial measures to regulate the risk.

  • Data System Audit by an external auditor accredited by CISA.

As we would like to think, directing such types of elements is an excellent move taken by the RBI. RBI submitted the NBFC Account Aggregators rules for this in 2016. It is not desirable, however, to call them NBFCs as they do not transmit any kind of money-related operation.

RBI-DNBR may cancel the Aggregator Account Registration Certificate if any of the following conditions are met:

  • The company stops running Aggregator business in India.

  • Also, if  the Company fails to comply with any condition under which the certificate of registration is issued as an account holder.

  • It appears from the Bank that the Company is no longer eligible for the Registration Certificate.

  • The Company breaches any conditions required to obtain a Registration Certificate.

The company failed to do the following:

  • Follow the appropriate instructions provided by the RBI.

  • Keep accounts or publish information or disclose financial information as directed by the Bank or under applicable law.

  • Submit its account books or other relevant documents to the Bank for inspection.

What is NBFC Account Aggregator (NBFC-AA) License?
How to get a NBFC Account Aggregator (NBFC-AA) License?
What is the cost of the NBFC Account Aggregator (NBFC-AA) License?
What are the documents required in a NBFC Account Aggregator (NBFC-AA) License?
What is the procedure to get an NBFC Account Aggregator (NBFC-AA) License ?
Is it mandatory for existing account aggregation businesses to apply for the NBFC-AA?
Who controls the NBFC Account Aggregator (NBFC-AA)?
What organizations can all participate in the AA ecosystem of the NBFC?
What is the main NBFC-Account Aggregator function?
Before applying for NBFC AA registration, do I need to have NOFs of Rs 2 crores?

NBFC Account Aggregator

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