Account Aggregators are the kind of organizations that serve as consent brokers to permit the sharing of financial data between financial institutions in the financial industry. Account Aggregation, then, is the process of compiling all financial data from various accounts, such as bank accounts, investment accounts, consumer accounts, company accounts, and other related financial accounts, and putting it all together on a single platform. In this article, we will discuss NBFC AA License.

Account Aggregators are the companies in the financial sector that provide structured distribution of financial data from financial information providers to financial information users. The user’s consent is requested to communicate this information. The users are in charge of administering and rescinding the consent.

What is an NBFC AA License?

The organization that handles accounts for NBFC customers is known as the NBFC Account Aggregator (NBFC AA). Customers’ multiple accounts held in various NBFC businesses are tracked and provided information by NBFC-AA. A customer’s financial involvement in various NBFC products, such as mutual funds, insurance, etc., will be made clear by the information about their account, which would be presented as organized, consolidated, and retrievable data. In 2015, the RBI developed this approach. The Reserve Bank of India (RBI) has released master directives for Non-Banking Finance Companies – Account Aggregators (NBFC-AA). The NBFC-AA (NBFC Account Aggregator) is a type of budgetary component that is involved in the process of providing information to NBFC clients identified with accounts held by clients in different NBFCs. Such data will be compiled and organized. Data about the customer’s financial participation with different NBFC products would be included.

What does financial information include in relation to the NBFC AA License? 

The following details make up financial information in relation to the NBFC AA License:

• Deposits made at NBFCs
• Investment Product with Structure (SIP)
• Business Card (CP)
• Investment certificates (CD)
• Public securities (Tradable)
• Equities-Sharing Bonds Debentures
• A mutual fund
• Exchange Traded Securities (ETF)
• Inventories from Indian Depository
• Schemes for Collective Investment (CIS)
• Policies for Alternative Investment Funds

Advantages of using NBFC Account Aggregator in relation to attaining NBFC AA License

The following are the advantages of the NBFC Account Aggregator in relation to attaining an NBFC AA License:

• The NBFC-Account Aggregator’s main job is to provide information on the accounts that customers have. Data is stored in an integrated, retrievable, and sorted manner. Utilizing the account aggregator’s services is beneficial for a client.
• The NBFC-AA handles IT-related tasks, thus the client is likely to receive cutting-edge data. Contrary to other NBFCs, NBFC-AA (NBFC Account Aggregation site)’s responsibility is the collecting of accounts.
• As a result, they won’t engage in the exchange of financial resources with their consumers. It is permitted for an aggregator to communicate investable surplus in instruments rather than for exchange.
• The record aggregator will select the administrations estimation method after receiving board approval.
• The account aggregator’s adopted policies and methods must be open to the public and transparent.
• The NBFC-administrations AAs must guarantee that there is a suitable understanding between the aggregator, the client, and the financial service supplier. NBFC-AA (NBFC Account Aggregator) must abide by all of the conditions and terms of the license, including those relating to client insurance, corporate governance, handling of complaints, data security, audit control, and risk management framework. The Financial Stability and Development Council (FSDC) is in favor of NBFC’s performance. AA’s
• The NBFC-AA (NBFC Account Aggregator) compiles information about the customer’s financial resources and provides it to the client in a sorted, combined, and retrievable manner. They must correctly monitor the set of regulations that the RBI has created.

NBFC-AA Registration Requirements in order to acquire NBFC AA License

Below mentioned are the requirements for NBFC-AA Registration to attain an NBFC AA License easily:

• The NBFC-AA (NBFC Account Aggregator) license has a minimum requirement of Rs. 2 crores. However, the company will have a time of 12 months after receiving RBI’s primary permission to raise money. NBFC-AA (NBFC Account Aggregator) is only permitted to offer account aggregation-related services.
• After gaining regulator clearance, NBFC-AA will have a period of 12 months to build up all necessary tie-ups and technologies that are necessary to conduct the aggregation activity.
• The customer-related information will be provided to the financial user by NBFC-AA.
• Like the other NBFCs, NBFC-AA lacks the necessary skills to conduct fund-based business. Primarily cannot be categorized as an NBFC. Customers’ financial asset information cannot be used for any other reason by NBFC Account Aggregators.
• According to the RBI^[1], a company that is engaged in aggregating accounts of a certain financial sector that is under the control of another regulator may be free from needing RBI clearance. Similar to other NBFCs, these firms are not allowed to engage in financial activities.

Process

The following conditions must be fulfilled in order to get an Indian NBFC AA License:

• According to the 2013 Companies Act, the first step is company registration;
• To provide these kinds of services, the organization must possess the necessary resource;
• The Company has to be equipped with the necessary plan regarding a sufficient financial structure to take on the Account Aggregator problem;
• The management’s general character shouldn’t be biased toward any particular public interest;
• For the functions of the Account Aggregator, a COR (Certificate of Registration) from the Reserve Bank of India is required;
• The applicant must apply to the RBI to get the COR;
• The minimum required amount is 2 crores of rupees;
• Equipped with a data innovation framework and IT (Information Technology) systems to undertake account aggregation services; the leverage ratio should not exceed 7 times;
• The NBFC-AA must have legitimate, fit promoters.

Conclusion

Users will have access to a platform through NBFC-AA to send payments online or transfer financial information from their numerous accounts to any business that requests access to that information (FIU). Sending a request for the necessary financial information to the user via NBFC-AA Identifier can start the consent request process. NBFC-AA will make sure that the desired information is given when the user’s approval has been received via the NBFC-AA app after the request has been sent. This has a lot in common with a request for permission to collect in a UPI (Unified Payment Interface) application. You can get in touch with our legal experts at BizAdvisors.io for any professional assistance regarding the NBFC AA License.

Read our article:Everything about NBFC Registration Process in India