NBFC Account Aggregator License: An Overview NBFC Account Aggregator License (NBFC AA License) is a license issued by the RBI to NBFCs that act as a bridge between financial institutions and individuals. In India, NBFCs that want to act as account aggregators should obtain an NBFC AA license. Securing an NBFC Account Aggregator License is a key requirement that initiates innovative information technology operations for securing and storing specialized financial data. Confused about the licensing requirements of NBFC AA? Connect with our experts for NBFC AA License services and secure the license without any hassle. We are dominating the industry with a 70% market share in providing assistance and compliance support for obtaining an NBFC account aggregator license in India. Gear up to become a leader in India’s financial ecosystem. What is NBFC Account Aggregator? NBFC Account Aggregators are financial data-sharing entities which create an ecosystem for the aggregation/ sharing of financial information across different financial sector organizations. In a broader sense, it is a legal entity extracting all the financial information of users (individual financial data) and providing information in such a manner that allows the reader to simplify, understand and analyze the various financial data and holdings of individuals. Furthermore, the Reserve Bank of India has issued a master direction on NBFC Account Aggregator with the intent to safeguard the interest of the NBFC clients having accounts with other financial institutions. However, the Account Aggregators are prohibited from sharing financial information without obtaining the consent of the user. Definition of Financial Information under Master Directions Financial Information comprises the following points mentioned below- Deposits with NBFCs Bank Deposits Commercial Paper (CP) Government Securities (Tradable) Structured Investment Product (SIP) Mutual Fund Units Bonds Debentures Equity Shares CIS (Collective Investment Schemes) Units Exchange Traded Funds Indian Depository Receipts Insurance Policies AIF Units Units of Real Estate Investment Trusts Balances under the National Pension System (NPS) Units of Infrastructure Investment Trusts Insurance Policies Pillars of NBFC Account Aggregator Ecosystem The business model based on the NBFC account aggregator ecosystem comprises the following important aspects/ pillars as discussed below: 1. Financial Information Provider (FIP) As per the RBI's master direction, Financial Information Providers (FIPs) are entities acting like banks (including non-banking companies, asset management companies, insurance repositories, and other entities specified by Apex Bank) to provide monetary-related services. 2. Financial Information User (FIU) The Financial Information User (FIU) includes NBFC entities looking for financial information related to individual holdings. Some of the FIU institutions/ entities are RBI, SEBI, IRDAI, and PFRDA. Market Size of Account Aggregators The market size of NBFC account aggregators has significantly grown from 2021 to 2023, leading to the establishment of 420 financial institutions, now part of the system. Over this period, around 38.95 million accounts have been linked, and 40.08 million consent requests have been successfully fulfilled. Benefits of NBFC Account Aggregator License Have a look at the benefits of acquiring the NBFC Account Aggregator License for the reliable and trustworthy sharing of digital financial information in an encrypted manner. Eliminates Risk: The NBFC Account Aggregator eliminates the risk among financial institutions and companies applying for the NBFC AA license as per the Master Direction of 2016. Enhance Credit Access: It improves credit access for SMEs and individuals with limited credit history. Data Privacy and Security: Complies with IT Act 2000 and ensures secure customer data handling. Cost-Efficiency: Reduces the cost for financial institutions by automating customer data collection. Compliance with Regulatory Requirements: Ensures compliance with regulations for secure financial data sharing. Mandatory Requirements for NBFC AA License The mandatory requirements required to be complied with for obtaining an NBFC AA License in India are as discussed below: Eligibility Criteria: Fintech companies, banks, credit rating agencies, investment platforms, insurance firms, loan providers, and compliance firms need an NBFC AA License in India. Net Worth: A minimum net owned fund of Rs. 2 crores is mandatory for companies applying for the NBFC account aggregator license, following RBI registration. Business Plan: Companies must create a comprehensive business plan to demonstrate promoter suitability as per RBI guidelines. Make Necessary Declaration: CEOs and relevant directors must declare fit and proper status according to RBI master directions. Annual Clarification of Management Changes: Companies must submit annual clarifications on management changes within 15 days of the fiscal year's end, verified by legislative auditors. Provide Arrangement Deed: An arrangement deed from key company officials is required for the NBFC Account Aggregator License. Technical Capability: Applicants must have a robust IT system to support NBFC AA operations. Documents Required for NBFC Account Aggregator License Have a look over the quick documents required for obtaining the NBFC Account Aggregator License, as provided below: Certificate of Incorporation KYC Details of Promoters KYC Details of Directors Net Worth Certificates of Directors and Shareholders Bankers’ Report Business Plan Audited Financial Statement Fit and Proper Declaration Other Documents Procedure for NBFC Account Aggregator License Registration The procedure defining the online registration of NBFC Account Aggregator License in India is as discussed below: Filing of Application: The applicant companies seeking NBFC Account Aggregator License registration must file an online application to the Department of Regulation, Mumbai, of the Reserve Bank of India (RBI). Submit Legal Documentation: The applicant companies are required to prepare and submit all legal documents and information to the RBI as per the guidelines for acquiring an Account Aggregator License of NBFC. Review and Due Diligence: The RBI reviews, scrutinizes, and verifies the application and the submitted documents. It also conducts a due diligence assessment of the proposed NBFC AA's "fit and proper" conditions. Grant of In-principle Approval: Upon satisfaction with the application and documents, the RBI grants in-principle approval, valid for 12 months, to register as an Account Aggregator subject to conditions it may impose. Grant Certificate of Registration: Once the company is ready to commence operations, the RBI grants the Certificate of Registration as an NBFC Account Aggregator, typically within 6 to 12 months of the in-principle approval. NBFC AA License Compliance Requirements Let’s understand the NBFC AA License Compliance requirements in brief- Data Security: NBFC Account Aggregators must use IT-driven technologies to secure data from unauthorized access, alteration, destruction, or disclosure. Filing of Annual Audits: Registered NBFC AAs must undergo a financial system audit conducted by an external auditor accredited by a Certified Information System Auditor (CISA). Disclosure of Requirements: NBFC AAs must comply with the disclosure requirements outlined in Section I of Annexure VII of the RBI (Non-Banking Financial Company-Scale Based Regulation) Direction, 2023. Set up Committees: NBFC AAs are required to establish Audit, Nomination, and Risk Management Committees as per RBI directives. Board Approved Policy: NBFC Account Aggregators must have a Board-approved policy for resolving customer grievances and pricing of services. Establish a Complaint Resolution Mechanism: NBFC Account Aggregators must establish a customer grievance mechanism in line with RBI master directions to resolve disputes. Penalty for Non-Compliance with NBFC AA Regulations Any non-compliance with the guidelines and instructions of the RBI imposes a penalty or leads to cancellation of in-principle approval by the RBI. The following list comprises the circumstances leading to non-compliance with NBFC AA regulations: If the entity ceases to operate the NBFC account aggregator business in India. If it fails to comply with any terms and conditions of the Certificate of Registration. If the RBI deems the company unfit to hold the NBFC account aggregator license. If the company breaches any required conditions to obtain or maintain the NBFC AA registration certificate. If the company fails to maintain or disclose financial information as directed by the RBI. If the company fails to submit accounts or required documents for RBI inspection. Role of NBFC Account Aggregators The roles and responsibilities of NBFC Account Aggregators as specified under the Non-Banking Financial Company- Account Aggregator (Reserve Bank) Directions, 2016 are as discussed below: Provide consent-based services to customers. Ensure mechanisms for proper customer identification. Undertake only account aggregation business, no other business activities. Ensure protection of customers' information (e.g., credit history, bank statements, GST data). Operate as a data service exchange. Possess a Citizen’s Charter guaranteeing customer rights protection. Must not take monetary benefits from customers. Not delegate account aggregation business to third parties. Not access user authentication credentials related to various FIPs. Customer services should be backed by proper agreements between AA, customers, and FIPs. Progress Update of Account Aggregator License of NBFC A consistent progress/ market adoption has been observed in the NBFC Account Aggregator framework across banking, securities, insurance, and pension sectors. Have a look over the progress update of the Account Aggregator license of NBFC in 2024: 94 financial institutions live (as both FIP and FIU). 60 financial institutions live (as FIP only). 353 financial institutions live (as FIU only). Over 2.12 billion financial accounts enable data sharing on AA. Around 77.27 million users have linked their accounts to the AA framework. Timeline for NBFC Account Aggregator License The timeline for obtaining an NBFC Account Aggregator License is estimated to be around 6 to 12 months from the date of application filed to the Reserve Bank of India. Have a look over the detailed timeline required to acquire an Account Aggregator License of NBFC: Document Preparation & Application Submission: Approximately 1 to 2 months. Initial Review by RBI: Approximately 2 to 3 months. Detailed Evaluation: Approximately 3 to 4 months. Approval Process: Approximately 1 to 2 months. Post-Approval Compliances: Ongoing. Our Comprehensive NBFC AA License Services Have a look at the comprehensive NBFC AA License services offered by our expert consultants- Personalized Consultation Application Filing Paperwork Management Regulatory Compliance Management Post-Licensing Support Technology and Infrastructure Setup Assistance in Developing an NBFC Business Plan Business Expansion Support Reasons to Trust Enterslice for NBFC AA License Services We at Enterslice offer expert guidance and assistance for acquiring an NBFC account aggregator license or permit. Given below are the reasons why we are the best choice for NBFC AA License Services in India- Over 10+ Years of Industry Expertise 99% Success Rate in Securing the NBFC AA License in India Top-notch NBFC AA License Services Necessary Documentation Support for Acquiring the Account Aggregator License of NBFC 100% Compliance with RBI Guidelines for NBFC Account Aggregator License Dedicated Fintech Experts to Assist with Online Applications Transparent, Cost-effective Pricing Model with No Hidden Fees Strong Liaison with Regulatory Bodies for a Worry-free Pathway to Obtain an NBFC AA License
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