This license will enable the fintech to launch its platform for a secure exchange of consent-based financial data of consumers with financial institutions
Cygnet Account Aggregation (Cygnet AA), a part of the Cygnet Group, has received an in-principle approval from the Reserve Bank of India (RBI) to operate as an account aggregator (AA).
This RBI-regulated open financing data-sharing protocol allows consumers to instantly share their financial data, securely and digitally with various financial institutions. It facilitates financial institutions to quickly and conveniently access consumers’ consent-based financial data.
Niraj Hutheesing, director of Cygnet AA said that the AA license will allow the company to participate in the transformational changes that are taking place in the financial sector. “We’ve seen how UPI has changed the payment ecosystem, similarly, Account Aggregator will be a game changer for digital lending and financial inclusion. Small and medium-sized businesses will get better credit facilities whilst banks and other financial institutions will get an opportunity to widen their lending portfolio,” he said.
As per a report by Sahamati, 1.1 billion accounts, including all the major public and private bank accounts are live on the account aggregator ecosystem. The RBI, Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA) are already in various stages of integration with the account aggregator ecosystem as Financial Information Providers (FIP).
“With the addition of Goods and Services Tax Network (GSTN) as a FIP, along with banks and financial institutions, this will play an important role in unleashing the flow-based credit facility to the otherwise underserved SME sector,” Hutheesing further added.