Review of Financial Information Provider (FIP) under the Account Aggregator Framework
Introduction
In this article, we will review the concept of the Financial Information Provider (FIP) under the Account Aggregator (AA) framework. We will discuss the definition of FIP as outlined in the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016. Additionally, we will explore the role of the Central Recordkeeping Agency (CRA) in the National Pension System (NPS) and the decision to designate it as the FIP within the AA ecosystem.
Definition of Financial Information Provider (FIP)
As per paragraph 3(1)(xi) of the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016, the term ‘Financial Information Provider’ is defined. This definition encompasses the entities responsible for providing financial information to account aggregators.
Role of Central Recordkeeping Agency (CRA) in the National Pension System (NPS)
In the NPS architecture, the Central Recordkeeping Agency (CRA) plays a crucial role. The CRA is registered under section 27 of the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013. Its primary function is to serve as an interface between different intermediaries in the NPS system. The CRA holds vital information related to NPS subscribers, including their balances.
Designating Central Recordkeeping Agency (CRA) as the Financial Information Provider (FIP)
Considering the importance of the CRA in managing financial information, the PFRDA has suggested replacing the term ‘Pension Fund’ with ‘Central Recordkeeping Agency’ as the financial information provider within the AA ecosystem. This decision aims to consolidate the role of the CRA and utilize its expertise in managing and providing financial information effectively.
Modification of the Master Direction
In line with the decision to designate the Central Recordkeeping Agency as the FIP, the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016, is being modified accordingly. These modifications ensure alignment with the new definition and provide clarity on the role of the CRA within the AA framework.
Background
The Reserve Bank of India (RBI) has made certain modifications to the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016. These changes are aimed at enhancing the functioning of the account aggregator ecosystem and ensuring the smooth transmission of financial information.
Purpose of the Modification
The modifications to the Master Direction are intended to address various issues and enhance the efficiency of the account aggregator framework. These changes have been made after careful consideration and feedback from stakeholders in the financial industry.
Key Modifications
Definition of Financial Information Provider (FIP): The definition of FIP has been revised to include Central Recordkeeping Agencies (CRA) as a recognized entity responsible for providing financial information to account aggregators. This modification aligns with the role of CRAs in the National Pension System (NPS) and acknowledges their expertise in managing financial information.
Role of CRAs: The modified Master Direction elaborates on the specific role and responsibilities of CRAs as FIPs within the account aggregator ecosystem. It clarifies their obligations in terms of data sharing, ensuring the security and privacy of financial information, and maintaining the integrity of the information provided.
Reporting Requirements: The modifications also introduce enhanced reporting requirements for CRAs acting as FIPs. They are now required to submit regular reports to the Reserve Bank of India (RBI) to ensure transparency and foster proper oversight of the account aggregator ecosystem.
Operational Guidelines: The modified Master Direction provides detailed operational guidelines for account aggregators and CRAs. These guidelines ensure that financial information is collected, aggregated, and shared in a secure and standardized manner, thereby increasing the confidence of consumers and other stakeholders.
Implementation Timeline
The modifications to the Master Direction – Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016 have come into effect immediately. All account aggregators and CRAs are required to comply with the revised guidelines within the specified timeline provided by the RBI.
Conclusion
The review of the Financial Information Provider (FIP) under the Account Aggregator (AA) framework highlights the role and significance of the Central Recordkeeping Agency (CRA) in managing financial information. By designating the CRA as the FIP, it will enhance the efficiency and effectiveness of information aggregation within the AA ecosystem. The modifications made to the Master Direction ensure coherence and align the regulatory framework with industry developments.
https://www.estabizz.com/
Disclaimer:
Estabizz Fintech compiled the material in this article using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. They ensured the completeness and correctness of the material through due diligence. When using this material, users must consult the relevant, applicable legislation. The given data may change without prior notice and does not constitute professional advice. Estabizz Fintech disclaims all liability for any results from the use of this material.
