Nandan Nilekani launched ‘Account Aggregator’ (AA) early this month and called it a UPI moment. Can the AA framework change lives as much as UPI? Krishna Prasad of One Money, a licenced AA, and Siddharth Shetty of iSPIRT, discussed this with CNBC-TV18.
Account Aggregator is a unit licensed by Reserve Bank of India (RBI). What does it do with the consent of a borrower? With the consent of a borrower, it lets a bank, which is giving him a loan, view his data in other banks. So basically, it makes it easy for a bank to judge the borrower's credit worthiness.
But don’t CIBIL and other credit bureaus do the same? Here’s the difference.
Credit bureaus give credit information of the borrower to a bank – what loans does he have, how regular is he with repaying his loans. The AA gives deposit information, tells the lender how much of assets he has in various banks, whereas credit bureaus analyse borrowers’ repayment record and give a credit score.
AAs can’t even see the borrower’s data; they merely let a lending bank or non-banking financial companies (NBFCs) view the data for a limited period.
Lately other data providers like GSTN have also agreed to share their data with the AAs. So how does it help? Borrower doesn’t have to carry bulky bank and tax statements to the lending banks. He can give his consent and the lending bank can get all the information by way of a few clicks. So how does life change for borrowers? Krishna Prasad of One Money, a licenced AA, and Siddharth Shetty of iSPIRT, discussed this with CNBC-TV18.
“Our partners have already issued loans to people who have shared information through us. So, we are already there and the action has begun,” said Prasad.
“Other than banks, we will also have mutual funds (MFs), insurance and provident fund accounts available through AAs over the next few months. They are part of the regulated entities, which have been put through this system by Securities and Exchange Board of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDAI), so it is a matter of time,” he added.
“If we take a look at the ecosystem today, you are either physically running around to different branches and institutional setups, or you are digitally running around to different portals to access your data. This data is being shared globally, almost in a completely dark manner without your consent. So, you have no transparency or visibility to where your data is going, for what purpose it is being shared. In many cases, it even results in harm. So, we should place the AA in a broader context called the data empowerment and protection architecture, with India at the helm. It basically brings a techno-legal approach to privacy that hasn’t been done in any other country before,” said Shetty.
“The real innovation that will happen is that an innovative ecosystem will open up on financial information, apart from that fact that for the first time, people will have control over their data,” he mentioned.
For the full interview, watch the accompanying video.