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NBFC Account Aggregator (NBFC-AA) License

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What does aggregator of account mean?

Before you access the NBFC Account Aggregator license, it is important to understand the word "Account Aggregator." Account aggregators are such organisations that, in addition to keeping records and securing approval, facilitate the sharing of financial data by financial institutions. Permit can be deferred and treated under this method.

  • They share financial information with the receiver of financial information from a server. Let's explain the meaning of the two terms to hear you better:
  • Financial Information Provider (FIP): The supplier of financial services regulated by the financial sector;
  • Financial Information User (FIU): A financial sector regulator-controlled body like RBI, SEBI, IRDA, PFRDA.
  • The financial information to be shared is specified in the DNBR Master Guidelines of the RBI (Department of Non-Banking Regulation).
  • Note: • Financial information is defined in the guidelines as:

"Financial information" includes the following information for financial information suppliers:

  • Bank deposits comprise safe deposit accounts, pension savings accounts, revolving deposit accounts and existing deposit accounts;
  • NBFC deposits o Structured Pension Form (SIP) o Business Paper (CP)
  • Coin of Deposit (CD)
  • Government Securities (Tradable) g. Equity securities h. Liabilities
  • Debentures.
  • Mutual Fund units
  • Funds exchanged in exchange for Indian receipts depository m. Collective structures of savings (CIS Units n). Alternative Investment Units (AIF) or National Pension Plan (NPS) or Policies on Balances. Public asset protection of immovable public assets
  • Any other details the Bank might recognize for the purposes of these instructions from time to time;

What is an NBFC account aggregator?

NBFC Account Aggregator is the category of entities that serve as consent brokers allowing financial data to be shared between financial institutions in the financial sector. Nevertheless, the information can only be shared with the permission of the consumer. The RBI conceptualized this in 2015. RBI has named Non-Banking Finance Companies Master Control — Account Aggregators (NBFC-AA) NBFC-AA (NBFC Account Aggregator) is a type of financial entity that provides NBFC clients with details on accounts held by clients in specific NBFCs. All details will be collected and arranged. The specifics will be on the financial commitment of a consumer to the numerous items of the NBFC.

Significance of NBFC-AA (NBFC account aggregator)

The main function of the NBFC-AA is to provide customer account details. Data is organized, processed and can be recovered. Using the assistance of the account aggregator is entirely voluntary for a customer.

The NBFC-AA executes IT-oriented operations that mean that the user has access to digital knowledge. The key function of NBFC-AA (NBFC Account Aggregator) is to consolidate accounts; thus, unlike some other NBFCs, financial capital should not be shared with its customers. An aggregator can deploy surplus investment in instruments, not for commercial purposes. The Board-approved program of the account aggregator will determine the price of the goods.

NBFC-AA (NBFC Account Aggregator) services must be provided by appropriate agreements / between aggregator, consumer and financial service provider. NBFC-AA (NBFC Account Aggregator) must conform to authorization terms and conditions such as customer protection, complaint settlement, data security, etc, Corporate governance, assessment and risk management system. The NBFC-AA definition comes within the Council for Financial Stability and Development (FSDC).

NBFC-AA (NBFC Account Aggregator) collects information and introduces it to the consumer in a condensed form on the financial assets of the company. See how structured and recyclable this is. The RBI has specified a set of criteria for compliance with these types of organizations.

What are the criteria for NBFC-AA registration?

A minimum Rs. 2 crore is required for the NBFC-AA (NBFC Account Aggregator) licence. Nonetheless, after receiving RBI's approval in theory, the organization will have a duration of 12 months to raise money. NBFC-AA (NBFC Account Aggregator) may provide any facility other than account aggregation.

On obtaining regulatory approvals in theory, NBFC-AA (NBFC Account Aggregator) will have a 12-month period to set up all the facilities and tie-ups required to execute this aggregation.

A individual who indulges in aggregate accounts of a specific financial sector controlled by other regulators may be exempted from obtaining RBI approval, according to the RBI. NBFC-AA (NBFC Account Aggregator) governs RBI. Like other NBFCs, financial operations are not allowed for these types of companies.

The NBFC-AA will provide the financial company with customer information. Like other NBFCs, we cannot carry out fund-based trades. We can't consider them prima facie as NBFCs by nature. NBFC Account Aggregators cannot use customers ' financial asset details for any other purpose.

What are NBFC Account Aggregators ' duties and responsibilities?

The primary responsibility of NBFC-AAs is to collect and share each consumer's information without explicit consent. Here are the NBFC-AAs (NBFC Account Aggregators) duties and responsibilities as laid out in the directions of the RBI:

Gain customer approval;• gain statutory authorisation for such operations; •Customer Identification System;• Consumer Interest Protection under the Citizens ' Charter; and • Customer Financial Information Safety• Ensure that no information is collected and transmitted without the proper consent of the public.

What is the NBFC-AA authentication form?

  •  The registration process of the NBFC-AA shall be carried out in compliance with the master directions of the RBI. There is no need to hold public services in this type of organisation and there is no user interface. The registration of NBFC-AA (NBFC Account Aggregator) requires:
  • The first move is to establish businesses in line with the 2013 Corporate Act.
  • To provide these facilities, the organization must have the necessary resources.
  • The company developed a sufficient capital base to run the transaction aggregator.
  •  The general nature of administration is not harmful to the public interest.
  •  To carry out the activities of the account aggregator, a Certificate of Registration (CoR) must be issued from RBI. The applicant can apply for a Certificate of Registration (CoR) from the RBI.
  •  At least Rs. 2 crore is needed.
  • Equipped with IT systems to achieve consumer aggregation goods
  • Suitable and appropriate NBFC-AA promoters
  •  Interest should not surpass 7 times.

What should the NBFC-AA (NBFC Account Aggregator) do during the authorisation's conceptual validity period?

The company shall make arrangements for the IT process during the validity period and provide all the necessary legal documentation for the operations to be performed. However, in the event of non-compliance, RBI may cancel NBFC-AA's CoR: if the company ceases to conduct account aggregation operations;

The company does not meet with the conditions of the RBI's certificate of registration; or

  • Where it is stated that NBFC-AA (Non-Banking Financial Organization-Account Aggregator) is no longer eligible to retain a certificate of registration; or
  • Where the organization does not comply with the following conditions:
  • RBI guidelines; or
  • Retaining accounts;

What are the correct conditions for RBI and RBI?

  • NBFC-AA (NBFC Account Aggregator) shall use the following criteria:
  • Create a plan to evaluate the suitability of the proponent and the appropriate standards.
  • The plan is based entirely on the guidance provided by RBI.
  • Directors / managing director / CEO shall collect the statement in accordance with the template set out in the instructions.
  •  In compliance with the framework set out in the guidelines, the managers / managing director / CEO shall receive a certification of the covenant.
  •  Issue, within 15 days of the end of the financial year, a formal Notification of Change to the Directors / General Manager / CEO duly authorised by the Statutory Auditors on the appropriate and reasonable conditions.

Data security requirements NBFC-AA (NBFC Account Aggregator)

Having a robust This network is important for NBFC-AA as they carry a lot of financial information from various customers. These types of entities are solely responsible for the safe storage and transfer of data from financial information providers to users. They should also insure that their computer is unable to access or store user credentials.

The following instructions have been defined for data security purposes;

  • Protection against unauthorized access, alteration, deterioration, misuse or disclosure of records and dates
  • Use the technology platform to preserve financial information
  • Take the necessary risk management measures
  • Timely evaluation of the CISA-certified forensic information system auditor.

Conclusion:

The RBI has taken a very good initiative, in our opinion, to control this form of agency. For this cause, RBI released guidelines of NBFC Account Aggregators in 2016. However, it is not appropriate to call them NBFCs as they do not have any financial activity at all.

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