RBI to authorise inter-operability among NBFC-AAs

Why in the News

Information on a person’s financial assets, now fragmented across about 15 account aggregators, will become viewable on a single platform. The Reserve Bank of India (RBI) will enable interoperability among Non-Banking Finance Company account aggregators (NBFC-AAs) by December 31, 2026. It will also let depositories add bank deposits to the statements they send investors.

What is an account aggregator, and why make them interoperable?

1. Account aggregator: An NBFC-AA is an RBI-regulated firm that moves a customer’s financial data between institutions only with the customer’s consent. It works like a courier that delivers records only on the owner’s signed instruction.
2. Fragmented view: With data split across many aggregators, an individual cannot see all financial assets in one place.
3. Interoperability: Aggregators will exchange information with each other, giving the individual a consolidated view of all financial assets.
4. Advisers’ access: With customer consent, insurance brokers, asset managers and investment advisers could use the data to give better-informed financial advice.
5. The takeaway: A household’s savings, investments and policies can be seen together for the first time, which makes financial planning and advice more complete.

What changes for Consolidated Account Statements?

1. Consolidated Account Statement (CAS): Depositories regulated by the Securities and Exchange Board of India (SEBI) send investors a CAS that summarises their holdings in one document.
2. Missing deposits: The CAS does not include bank deposits, which leaves a significant gap in an individual’s consolidated financial picture.
3. RBI facilitation: The RBI will help depositories add bank deposit information to the CAS.
4. Phased coverage: Deposits from banks already onboarded come first, and other banks will be brought in over time.

Why does a single financial view matter?

1. Dormant deposits: A combined view helps track dormant deposits, money lying untouched in accounts, especially after an account holder’s death, when families may not know where savings were kept.
2. Lending on cash flow: Lenders using aggregator data can judge a borrower’s cash flow, not only a credit score, which widens access to data-based credit.

Challenges

1. Informed consent: Users may approve data sharing without understanding which advisers or firms will see their records.
2. Concentrated risk: A single view of all assets becomes a high-value target for data breaches and fraud.
3. Uneven bank coverage: Until every bank joins, statements will show some deposits and miss others, giving an incomplete picture.
4. Two regulators: Bank data falls under the RBI and depositories under SEBI, so formats and safeguards must be aligned across both.

Way Forward

1. Data protection alignment: Build consent withdrawal and purpose limits into the system in line with the Digital Personal Data Protection Act, 2023.
2. Onboarding deadline: The RBI should fix a date by which every bank shares deposit data with depositories.
3. Joint standards: The RBI and SEBI should issue common technical and security standards for shared financial data.
4. Heir awareness: Banks should tell nominees and legal heirs how to use consolidated statements to trace a deceased holder’s deposits.

Conclusion

The RBI has moved to join up India’s fragmented financial data, but full coverage depends on every bank and aggregator taking part. Whether consent safeguards keep pace with wider access to that data will decide if a single financial view earns public trust.

Back2Basics: Depositories

1. What a depository does: It holds investors’ shares and other securities in electronic (dematerialised) form, so no paper certificates change hands.
2. India’s depositories: National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
3. Legal basis: They operate under the Depositories Act, 1996 and are regulated by SEBI.
4. Investor access: Investors reach them through depository participants, such as brokers and banks, which open and service demat accounts.

Matching Previous Year Question

“[2026] An e-commerce revenue model where the seller has control over pricing but doesn’t keep products in stock and instead transfers customer orders and shipment details to a third-party supplier, who then ships the goods directly to the customer, is called: (a) Dropshipping Model (b) Affiliate Revenue Model (c) Transaction Fee Revenue Model (d) Agency Revenue Model ANSWER: A”