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NBFC Account Aggregator License

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Overview of NBFC Account Aggregator

An NBFC Account Aggregator (NBFC AA) license is vital for financial companies wishing to act as account agents in India. Account brokers are responsible for safely collecting and mixing financial data from various sources, such as banks, mutual funds, and insurance companies, and giving this information to customers and other allowed entities.

NBFC AAs are financial data-sharing companies that allow the sharing of financial information across different financial sector groups and work as 'Consent Brokers.' They gather and provide information concerning multiple accounts held by customers in various NBFC companies, with the data being in the form of ordered, combined, and retrievable information that shows the financial action of the customer in different NBFC goods.

Financial information is shared according to the directions made by the RBI-DNBR, with the user's permission. NBFC AAs help decrease the NPA or bad loans of other NBFCs and improve their balance sheets by allowing safe loans to approved customers.

Eligibility for NBFC Account Aggregator License

To be eligible for an NBFC Account Aggregator (NBFC AA) license, your company must meet the following criteria:

Be registered as a non-banking finance company (NBFC) with the Reserve Bank of India (RBI): The candidate must be a registered NBFC with the RBI, as the NBFC AA license is specially made for financial institutions working in the non-banking field.
The applicant has to have a minimum net owned fund of ₹2 crore, which is the capital need established by the RBI for NBFC AAs.
The applicant's board of directors must include persons with extensive knowledge and experience in the financial sector, guaranteeing the company's capacity to run properly as an NBFC AA.
The application must have a solid technical basis and thorough data security mechanisms in place to guarantee the safe management and transmission of financial data, hence defining the main purpose of an NBFC AA.

Requirements for NBFC Account Aggregator (NBFC AA) License

Obtaining an NBFC Account Aggregator (NBFC AA) license needs the submission of various papers and the completion of specific requirements, including:

Applied for NBFC AA license using a properly filed application form as advised by the RBI.
The applicant must supply certified copies of the company's memorandum and articles of organization, which explain the company's goals and controlling structure.
The applicant must provide evidence of the firm's registered office address, either a copy of the lease agreement or property ownership records.
The application must submit specifics about the company's directors and important management people, including their credentials, experience, fit and appropriate declarations, etc.
The applicant must provide audited financial accounts for the last three years to show the financial stability and capital fit of the business.
The applicant has to provide a thorough business plan, including the suggested activities, target market, and development plans.
The applicant has to submit details on the technological infrastructure and data security policies of the organization to guarantee the safe handling and movement of financial data.

Why is receiving an NBFC account Aggregator License/Permit (NBFC AA) important?

Obtaining an NBFC Account Aggregator (NBFC AA) license is needed to allow the safe and legal sharing of financial information across different financial sector organizations. This license ensures that financial data is shared only with the consent of the user, ensuring data privacy and security. NBFC AAs act as consent providers, collecting financial data from various sources giving it to customers, and allowing organizations in an organized and retrievable format.

The NBFC AA license increases data efficiency, improves financial services, and supports regulatory compliance, thereby protecting the interests of both financial organizations and customers. It allows people to get a combined view of their financial holdings spread across different financial sector officials, making it easier to apply for loans or handle their funds. The license is important for any company looking to work as an NBFC AA in India.

Procedure of NBFC Account Aggregator (NBFC AA) License

The process of getting an NBFC Account Aggregator (NBFC AA) license includes the following steps:

The applicant must send a duly filled application form together with relevant documentation, including the company memorandum and articles of association, proof of registered office address, details of directors and key personnel, audited financial statements, and business plan to the RBI.
The RBI will assess the application to make sure the applicant satisfies the eligibility requirements and has the required tools and infrastructure to operate as an NBFC AA.
Should the RBI be happy with the proposal, it will grant the applicant an in-principle permission with validity for a period of twelve months.
During the 12-month validity term, the applicant must satisfy the requirements stipulated by the RBI, including establishing the requisite technological platform and completing the relevant legal papers, thereby fulfilling the criteria stated in the in-prince permission.
Once the RBI is certain the application satisfies all the requirements, it will grant the final NBFC AA license, enabling the business to start operating as an account aggregator.

This systematic approach guarantees that the RBI fully assesses the applicant's capacity and preparedness to run as an NBFC AA, hence preserving the integrity and stability of the financial data-sharing network.

NBFC Account Aggregator (NBFC AA) needs to follow during the principal approval period

During the in-principle acceptance stage, an NBFC Account Aggregator (NBFC AA) must:

Establish a strong technology base to support its services and ensure safe data handling and sharing.
Complete all necessary legal paperwork, including deals with Financial Information Providers (FIPs) and Financial Information Users (FIUs).
Maintain compliance with RBI standards, including reporting requirements and attention to data security laws.
Ensure it has the necessary cash and resources to run smoothly, including having a debt ratio not exceeding seven times.
Fulfill all conditions mentioned in the in-principle license, such as making the necessary tools and equipment.

The standard guideline for NBFC account aggregators on data security

NBFC AAs are needed to send all financial data securely from Financial Information Providers (FIPs) to Financial Information Users (FIUs). The allowed FIUs can only decrypt the data, ensuring that even the NBFC AA cannot view the raw information. This strong encryption-based system aims to reduce the risk of data leaks and illegal access to private personal financial data. The RBI has stressed the importance of having a full data security system with effective rules to protect this crucial information.

The RBI's data security rules for NBFC AAs are meant to keep the safety and security of the financial data-sharing environment, protecting the interests of both financial institutions and users. These steps are important for building trust and faith in the NBFC AA plan.

Cancellation of NBFC AA License Certificate

The removal of an NBFC Account Aggregator (NBFC AA) license certificate can occur under several conditions:

Non-compliance with RBI guidelines: Failure to meet RBI rules, including data protection and reporting duties.
Ceasing account aggregation operations: If the NBFC AA stops performing account aggregation activities.
Non-compliance with conditions of the Certificate of Registration: Failing to meet the conditions mentioned in the Certificate of Registration.
No longer eligible to retain the certificate: If the NBFC AA is no longer eligible to retain the registration certificate.

Why Choose Kanakkupillai?

Supported by a team of seasoned experts, we provide complete NBFC Account Aggregator (NBFC AA) licensing solutions. Our benefits include:

Our staff offers professional direction and help throughout the application procedure, therefore guaranteeing a seamless and quick path to getting the NBFC AA license.
We help prepare the essential paperwork and business plan so that all criteria are satisfied and the application is complete.
Our experts manage all contacts with the Reserve Bank of India (RBI), therefore saving you time and effort by liaising with the RBI on your behalf.
We provide post-licensed assistance, including compliance and regulatory updates, to help you keep operations running smoothly.
Our services are reasonably priced; we provide numerous payment choices to meet your requirements.

Frequently Asked Questions

What minimum net-owned fund is needed for an NBFC AA license? +

The minimum net owned fund needed for an NBFC AA license is ₹2 crore.

How long does the NBFC AA license application process take? +

The application process usually takes 4-6 months, depending on the application's completion and the RBI's review timeline.

Can an NBFC AA license be gained by a foreign company? +

Yes, a foreign business can receive an NBFC AA license, given it meets the required standards and follows the suggested application process.

What are the current law requirements for an NBFC AA license? +

NBFC AAs are needed to meet various legal requirements, such as sending frequent reports to the RBI, having suitable capital adequacy ratios, and sticking to data security and privacy standards.

Can an NBFC AA engage in any other business activities? +

NBFC AAs are banned from engaging in any other business activities except those specifically allowed by the RBI.