The Account Aggregator (AA) framework, which was first announced by the Reserve Bank of India (RBI) in 2016, will now be open for users to access account aggregation services with the potential to streamline credit access for MSMEs.
The fast-tracking of data sharing to broaden the scope of financial services for better products and services can help micro, small, and medium enterprises (MSMEs) access credit in a more convenient and trustworthy manner that eventually might help address the recession faced by MSMEs currently.
According to the RBI, AAs are a new class of non-banking financial companies (NBFCs) that offers account aggregation services — retrieving or collecting information of its customer concerning their financial assets and consolidating, organizing, presenting it to the customer or any other person as per the instructions of the customer, in exchange for a fee.
With the proposed framework, access to data is becoming more democratised, enhancing the ability of underwriters to have access to a richer set of data and provide options to MSMEs to borrow from lenders of choice, at more attractive rates. This flipping of market structure will help in greater and more viable credit access to the MSMEs.
Anubhav Jain, Co-Founder & CEO of online lending platform for SMEs Rupifi , said, “AA system has the potential to revolutionise lending to MSMEs by allowing much faster access of financial data of businesses to lenders and reducing the loan application cycle to a few minutes. With AA now making it possible to share other credit-worthiness proxies like digital invoices, tax returns, etc., it will help businesses towards cash-flow-based lending from current physical-collateral-based lending thereby getting more people and businesses in the formal credit system. This will, in turn, open multiple opportunities for need-based Book Now Pay Later (BNPL) facility, which is much needed for Indian MSMEs.”
