NBFC

CRIF gets RBI’s Approval to Operate as an NBFC Account Aggregator

The Reserve Bank of India has given permission for CRIF Connect Private, a subsidiary of CRIF S.P.A., to begin operations as an NBFC Account Aggregator (AA). With CRIF’s legacy, expertise, and experience, CRIF Connect is ideally situated to serve the interests of financial institutions as well as customers. A multinational corporation, CRIF specialises in credit bureau, outsourcing and processing services, credit solutions, and business information. 

The application will be accessible via the web and mobile devices, enabling users to choose the data they want to share with the financial institution in real time and examine all of their financial information in one location. Getting a license to act as an account aggregator takes work. Let us discuss the approval given to CRIF to act as an account aggregator, what is an account aggregator, the process of getting registration and the responsibilities to do after obtaining the certificate.

What is NBFC Account Aggregator?

The financial organisation known as the NBFC Account Aggregator serves as the Account Aggregator for NBFC customers. The NBFC-AA gathers and delivers data on clients’ accounts with various NBFC businesses. The customer account information will be presented as organised, aggregated, and retrievable data that will show the customer’s financial involvement in a variety of NBFC products, such as mutual funds, insurance, etc. 

A type of budgetary component known as the NBFC-AA (NBFC Account Aggregator) is involved in the process of providing information to NBFC clients identified with accounts held by clients in various NBFCs. Such information will be organised and united. The information will be in relation to the customer’s financial connection with the various NBFC products.

Approval to CRIF to act as an account aggregator

According to RBI-approved criteria, it is an end-to-end encrypted platform that securely collects and transfers a consumer’s financial data across financial institutions based on their explicit authorisation, making data sharing extremely safe.

• CRIF Connect, a division of credit bureau company CRIF S.P.A. received approval from the Reserve Bank of India (R.B.I.) to start acting as a Non-Banking Financial Company-Account Aggregator (NBFC-AA). 
• As an A.A. licenced to conduct business in India, CRIF Connect joins FinSec AA Solutions, Yodlee Finsoft, CAMSFinServe, NESL Asset Data, Cookiejar Technologies, and Perfios Account Aggregation Services. Financial institutions can access consumer financial data using the secure platform known as account aggregators.
• The Account Aggregator framework places the customer at the heart of the ecosystem and gives them control over safe and easy data sharing. It is a game-changer for boosting digital adoption and financial inclusion and offering financial services with higher operational efficiencies.
• Users of the CRIF Connect App can access all of their financial information in one location, decide what information to share with the financial institution and modify or cancel their consent at any moment.
• The A.A. network was launched as a financial data-sharing system to facilitate credit and investment, following the central bank’s guidelines on A.A.s from back in 2016, revised in 2021, giving consumers access to and control over their financial records and expanding the potential user base for financial sector entities and fintech companies.
• As of December 12, 2022, 26 financial institutions were registered as financial information providers (F.I.P.). Of these, 12 were public sector banks, 10 were private banks, one was a small finance bank, and three were life insurance companies. Ninety-four financial institutions were registered as financial information users (F.I.U.) on the A.A. platform.

Importance of Account Aggregators in the current trend

One of the most prominent open financial data-sharing protocols that are subject to R.B.I. regulation is Account Aggregator. It enables users to securely and digitally communicate their financial data with a variety of financial institutions quickly. It makes it easier for financial institutions to quickly and conveniently access clients’ financial data with their approval.

The account aggregator licence will enable us to participate in the transformational shifts in the financial industry. In a manner similar to how U.P.I. altered the payment environment, Account Aggregator will revolutionise digital lending and financial inclusion.

Better credit options would be available to small and medium-sized firms, and banks and other financial institutions would have the chance to widen their lending activities as Financial Information Providers, R.B.I., SEBI, IRDAI^[1], and PFRDA have already integrated with the ecosystem of account aggregators at various stages (F.I.P.). With banks and other financial institutions, adding GSTN (goods and service tax network) as a F.I.P. will be crucial in enabling the flow-based loan facility.

Terms connected to A.A.

The A.A. equation consists of these three fundamental parts:

Financial Information Provider: Organisations that give lenders the paperwork they require to consider loans. The mutual fund industry, insurance companies, bill/tax platforms, banks and NBFCs are a few examples.

Account Aggregators: The platform gathers and saves the files supplied by the F.I.P.s in an “electronic consent artefact” (similar to a locker that lenders can only access with the borrower’s permission).

Financial Information User: Users of financial information include banks, NBFCs, credit card businesses, digital loan platforms, and others.

Process of registration

Every applicant who needs to obtain a license as an account aggregator must follow this registration process:

• Every Account Aggregator must submit a registration application to the Department of Non-Banking Regulation in Mumbai using the form provided in Annex 1 for this purpose.
• The company must achieve the following requirements for the bank to examine the application for registration:- The company has the resources and money to provide such services to clients.
• The business has a sufficient capital structure to operate as an account aggregator.
• The company’s promoters are qualified and appropriate.
• The general nature of the company’s management, or projected management, must be beneficial to the public interest.
• The business has produced a strategy for an effective I.T. system.
• The public interest will be served by the Account Aggregator receiving a certificate of registration to start or continue doing business in India.
• After determining that the requirements have been met, the bank may give preliminary approval for the establishment of an account aggregator, subject to such conditions that it may think appropriate to impose.
• The bank’s in-principle approval will be valid for a period of twelve months following the day it was granted.
• The business must set up the necessary technological infrastructure, sign all other legal documents necessary to be operational and declare its status as being in conformity with the conditions of the bank’s in-principle approval within a year. After determining that the business is prepared to begin operations, the bank may give the company a Certificate of Registration as an NBFC Account Aggregator, subject to any conditions it sees the right to impose.

RBI’s power to cancel the certificate of registration

The bank may cancel the certificate of registration If a company does any of the following: 

(a) Ceases to operate as an Account Aggregator in India.

(b) It has not complied with any requirement that was attached to the issuance of the certificate of registration.

(c) The Bank becomes aware that the Account Aggregator is no longer qualified to hold the certificate of registration. 

(d) At any time fails to meet any of the requirements.

(e) Fails to follow any instructions given by the bank, keep records, publish and disclose its financial situation in accordance with any legal requirements, comply with any orders or directions given by the bank or provide its books of account or other pertinent documents for inspection when the bank requests it.

Account aggregator responsibilities and duties

• The account Aggregators must ensure that any services provided to a customer who has specifically applied to receive them are supported by the necessary agreements or authorisations between the Account Aggregator, the customer, and the Financial Service providers.
• Account Aggregator must not permit customer transactions involving financial assets.
• Account Aggregators are responsible for putting in place suitable systems for accurate customer identification.
• Account Aggregator may only provide information as described in paragraph 3(iv) to the customer to whom it pertains or to anyone else the customer has permitted. A comprehensive authentication and authorisation method is required.
• The account aggregators may not engage in any business that is unrelated to that of the account aggregator. Nonetheless, an Account Aggregator is allowed to invest the investible surplus in non-trading instruments.
• The Account Aggregators should not retain any customer data relating to financial assets that it has obtained from financial service providers.
• Account Aggregators must have a Citizen Charter that expressly promises to uphold a customer’s rights. Any information that the Account Aggregator may obtain from or on behalf of a customer is strictly confidential.
• If there is a discrepancy in the position of financial assets between the statement produced by the Account Aggregator and the Financial Service provider’s books, the position as it appears in the Financial Service provider’s records will be taken as accurate.

Conclusion

CRIF Connect is ideally situated to serve the interests of financial institutions as well as customers. The account aggregators framework aims to make loan applications for consumers considerably simpler and more secure and help them make wiser financial choices. Even though creating an account takes a moment, its advantages are substantial. With an account aggregator, obtaining loans from financial institutions, digital loans, and portfolio management services requires only one step.

Also Read:
Indian Account Aggregator System and the Role of RBI in AAS
All you need to know about Account Aggregator System in India