 "Reserve Bank of India, RBI")
The Reserve Bank of India (RBI) on Wednesday invited applications from entities to become a self-regulatory organisation (SRO) in the account aggregator (AA) space by June 15.
According to the RBI, the AA ecosystem is distinct in its complexity, involving the exchange of data among a diverse array of regulated entities (REs) operating under varied regulatory environments.
This complexity necessitates frequent coordination among REs to address various operational issues. Given its inherent diversity and the need to support smoother adoption and stabilisation, it is desirable to have a dedicated SRO for the AA space, the RBI said.
The RBI already has SROs for microfinance institutions and financial technology companies.
AAs facilitate the secure and seamless exchange of specified financial information through non-banking financial company-AAs, which act as intermediaries between financial information providers (FIPs) and financial information users (FIUs).
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These FIPs and FIUs fall under the purview of different financial sector regulators (FSRs), namely the RBI, the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority of India, and the Pension Fund Regulatory and Development Authority of India.
Currently, more than 10 entities operate as AAs.
“Owing to the idiosyncrasies of the AA ecosystem and the need to strike a balance between regulation and innovation, it is felt that an SRO for the AA ecosystem could play an important role,” the RBI said.
According to the RBI, the SRO-AA is expected to operate with credibility, objectivity, and responsibility under the overall oversight of the RBI to promote the healthy and sustainable development of the AA ecosystem.
Entities looking to apply for an SRO licence should be not-for-profit companies. Additionally, the SRO must demonstrate a net worth of ₹2 crore within one year of being recognised as an SRO-AA.
“The applicant must possess or demonstrate the ability to create the necessary infrastructure to enable it to discharge the responsibilities of the SRO-AA effectively and consistently. It must have the capability and resources for a robust IT infrastructure and the ability to deploy technological solutions within a reasonable time frame,” the RBI said.
Among its key functions, the SRO-AA must establish minimum benchmarks and conventions for professional market conduct among its members. In the interest of its members, the SRO-AA should aim to protect the interests of customers, participants, and other stakeholders in the ecosystem.
Additionally, the SRO-AA must complement and supplement the role of the RBI and other financial sector regulators in ensuring better compliance with regulatory guidelines, sector development, stakeholder protection, fostering innovation, and detecting early warning signals.
“The SRO-AA is also expected to act as a bridge between the participants and the Reserve Bank and other financial sector regulators,” the RBI said.
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