An Overview of NBFC Account Aggregator License

Are you running an NBFC and willing to operate as an account aggregator? If so, you must acquire an NBFC AA license (NBFC account aggregator license).

NBFC AA license is a permit granted to entities acting as consent brokers that enable the sharing of financial data among financial institutions in the financial sector. It allows the aggregators to convey investible surplus in instruments and not for exchange.

The entities seeking account aggregator licenses of NBFC work as data service exchanges for consent-based sharing of financial data and information like credit history, bank statements, wealth, insurance, GST data, etc. Unaware of the challenges in the path of securing an account aggregator license of NBFC? Reach out to our experts at Fastzeal and get assistance to apply for an NBFC account aggregator license online.

What is NBFC Account Aggregator?

NBFC Account Aggregators (NBFC AA) are financial entities that provide information concerning multiple accounts of customers across various NBFCs. They are authorized financial organizations that facilitate structured allocation of financial data from the Financial Information Provider (FIP) to the Financial Information User (FIU).

NBFC AA functions as a data-sharing platform that provides financial insights about clients’ accounts in different NBFCs. Unlike other NBFCs, they do not engage in fund-based activities. Instead, they operate as an API-based business model, ensuring secure and encrypted information aggregation.

Advantages of NBFC Account Aggregator Lice

Operational Risk Management

Entities obtaining an NBFC Account Aggregator License contribute to operational risk management and ensure business continuity.

Enhances Credit Access

NBFC Account Aggregators improve credit access for entities with limited credit history, allowing better financial inclusion.

Perform IT-Oriented Activities

NBFC Account Aggregators utilize IT-driven frameworks to provide advanced financial data, enhancing decision-making and investment opportunities.

Cost-Efficient System

The NBFC Account Aggregator model is a cost-effective system for financial institutions involved in direct customer data collection.

Compliance with Regulatory Requirements

An NBFC Account Aggregator license ensures compliance with regulatory standards, mitigating risks associated with real-time financial data sharing.

Ensures Data Privacy and Security

The NBFC Account Aggregator License plays a crucial role in securing clients' financial data and maintaining confidentiality.

Access to New Financing Services

Holding an NBFC Account Aggregator license enables faster access to modern financing services and seamless consent-based data sharing.

Eligibility Criteria for NBFC AA License

Entities seeking an NBFC AA License from the RBI must comply with the following eligibility requirements as per the Non-Banking Financial Company-Account Aggregator (Reserve Bank) Directions, 2016:

• Legal Entity: Must be a company incorporated under the Companies Act, 2013.

• Net Owned Fund: A minimum net owned fund of Rs. 2 crores is required.

• Company Name: The business name must include "AA" (Account Aggregator).

• Business Plan: A strategic business plan must be in place, including IT systems, HR planning, business acquisition, and manpower plans.

• Necessary Declaration: The company must submit required declarations and undertakings as specified in the RBI Master Direction.

• Covenant Deed: A signed Covenant Deed by the directors/MD/CEO, in the format prescribed by the RBI, must be obtained.

• Fit and Proper Criteria: Promoters must meet the fit and proper criteria under the RBI guidelines.

Who is Eligible for an NBFC Account Aggregator License?

• Fintech companies registered in India

• Banks & financial institutions

• Credit rating agencies

• Investment platforms

• Insurance companies

• Loan providers

• Wealth management firms

• Regulatory and compliance firms

Documents Required for NBFC Account Aggregator License

The following documents are required to obtain an NBFC Account Aggregator license in India:

• Certificate of Incorporation

• KYC Details of Directors

• KYC Details of Promoters

• Net Worth Certificates of Directors

• Net Worth Certificates of Shareholders

• Bankers’ Report

• Business Plan

• Audited Financial Statement

• Fit and Proper Declaration

• Other Necessary Documents

  
  

  
  

NBFC Account Aggregator Registration Process

Application Filing

According to the RBI master direction, the applicant entities are initially required to submit an application in the format prescribed in Annexure A of the regulation. The application must be submitted through an online mode to the Reserve Bank of India.

Document Submission

Next, the applicant must submit mandatory documents like a business plan, statement of capital funds, company identification information, etc., to stay compliant with the RBI requirements for holding an account aggregator license.

Review and Due Diligence

The bank is required to conduct a due diligence procedure for the review of registration conditions as specified under the Non-Banking Financial Company- Account Aggregator (Reserve Bank) Directions, 2016.

Grant of In-Principle Approval

Once the bank is satisfied with the review of the conditions specified in the RBI Master Direction, the in-principle approval is granted for registration as an account aggregator with a validity period of 12 months from the date of granting such in-principle approval.

Certificate of Registration

Once the entities comply with all regulatory & technical requirements within 12 months for commencing operations, the Bank grants the Certificate of Registration to the NBFC Account Aggregators.

Responsibilities of Account Aggregators

• Provide services to customers based on customer’s explicit consent

• Ensure providing services to customers, backed by appropriate agreements/authorizations

• Ensure appropriate mechanisms for proper customer identification

• Share information only with customers related to any other financial information user

• Deploy investible surplus by an account aggregator in instruments

• Have a Citizen’s Charter explicitly guaranteeing the protection of customer’s rights

• Perform the functions of obtaining, submitting, and managing the customer’s consent

  
  

Prohibited Responsibilities

• Not support transactions by customers

• Not undertake any other business than the business of account aggregator

• Not access financial information of customers through the account aggregator

• Not use the services of a third-party service provider for undertaking the business of account aggregation

• Not access user authentication credentials of customers relating to accounts with various financial information

• Prohibited from retrieving, sharing, or transferring financial information of customers

  
  

Participants in the NBFC Account Aggregator Ecosystem

Financial Information Provider (FIP)

Financial Information Providers (FIP) are financial organizations that grant users account information upon the request of another individual or organization and are harmonized under the financial sector. Banks, banking companies, NBFCs, asset management companies, depository pension funds, etc., are some entities identified as FIP from time to time.

Financial Information User (FIU)

The Financial Information Users (FIU) are those organizations that need information regarding the users from the FIP for purposes like customer analysis, market evaluation, etc. Users include both individuals and organizations regulated by the financial sector regulators such as RBI, IRDAI, SEBI, and PFRDA.

Technology Service Provider (TSP)

Technology Service Providers (TSP) make use of the Account Aggregator framework for developing modules to obtain a customer’s financial information directly from banks (through APIs). Moreover, they collaborate with FIPs and FIUs to deliver account aggregator-enabled products and services.

• Progress Status of Account Aggregator License of NBFC
  
  

  • 94 financial institutions went live (as FIP and FIU)

  • 60 financial institutions went live (as FIP)

  • 353 financial institutions went live (as FIU)

  • 2.12 billion+ financial accounts are authorized for sharing of data on AA

  • About 77.27 million users have linked their accounts to the AA framework
    
    

    Mandatory Compliances for NBFC Account Aggregators

    
    

    Disclosure Requirement

    NBFC AA must comply with the disclosure requirement as specified in Section I of Annexure-VII of the Master Direction- Reserve Bank of India (Non-Banking Financial Company- Scale Based Regulations) Directions, 2023.

    Transfer of Control

    The NBFC Account Aggregators are required to obtain prior written approval/ permission from the Bank for any takeover/ acquisition of control of an Account Aggregator or any change in the shareholding of an Account Aggregator.

    Declaration of Dividends

    The NBFC Account Aggregators shall comply with the eligibility criteria as specified in paragraph 15A.2 of the NBFC Account Aggregator (Reserve Bank) Directions, 2016, for the declaration of dividends up to a dividend payout ratio of 50%.

    Filing of Returns & Audits

    The Account Aggregators are required to make time-to-time submission of returns as prescribed by the Bank. Also, the NBFC AA entities must undergo a financial data system audit through an external auditor accredited by the Certified Information Auditor System.

    Set Up Committees

    The board of Account Aggregators should constitute Nomination, Audit, and Risk Management Committees for scrutinizing the declarations and deciding upon the acceptance or otherwise of the directors.

    Board Approved Policy

    The NBFC Account Aggregators must comply with the duly incorporated Board Approved Policy for resolving customer grievances and confirming pricing for services.

    Grievance Resolution Mechanism

    The NBFC Account Aggregator license-holding entities must establish a proper grievance redressal mechanism for resolving complaints and legal disputes among customers.

    Data Security

    The NBFC Account Aggregator must make use of IT-driven technologies to secure data from unauthorized access, alteration, destruction, disclosure, etc.

    Annual Clarification of Management Changes

    Every entity seeking registration as an NBFC Account Aggregator must furnish an annual clarification regarding changes in management (including CEO, directors, and managing directors) within a period of 15 days from the closing of the financial year.

What is the Difference Between FIP and FIU?

What is Included in Financial Information?

The RBI master direction for NBFC AA has specified financial information, which comprises the following:

• Deposits with NBFCs

• Structured Investment Product (SIP)

• Commercial Paper (CP)

• Certificates of Deposits (CD)

• Government Securities (Tradable)

• Equity Shares

• Bonds, Debentures

• Mutual Fund Units

• Exchange Traded Funds (ETF)

• Indian Depository Receipts

• Collective Investment Schemes (CIS) Units

• Alternative Investment Fund (AIF)

• Insurance Policies

• GST Returns

• Balances under the National Pension System (NPS)

• Units of Infrastructure Investment Trusts

• Units of Real Estate Investment Trusts
  
  

  Reasons to Trust Fastzeal for NBFC AA License Services

  
  

  10+ Years of Experience

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  Online NBFC AA License Services

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  Ensure Compliance

  We ensure compliance with RBI regulations and guidelines pertaining to data privacy, security, transparency, and consumer protection.

  
  

  Prepares Documentation

  We ensure the preparation of mandatory documents required to acquire an Account Aggregator License of NBFC.

  
  

  Record Keeping Services

  We offer expertise and experience in record-keeping services, including financial services, technology, data management, or other associated domains.

  
  

  Instant Support Services

  We offer instant support services, empowering you to share and control your financial data or information securely.

  
  

  Free Legal Service

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  Economic & Fast Delivery

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  End-to-End Encrypted Data Sharing Platform

  We provide an end-to-end encrypted data-sharing platform for the smooth and secure aggregation of financial information from FIPs to FIUs.

  
  

  Industry Professionals

  We hold a team of experts/ industry professionals with knowledge and an in-depth understanding of the NBFC and matters incidental thereto.