Mumbai, Mar 14 (KNN) The Reserve Bank of India has released on its website for consultation, a draft of the 'directions' to allow a new kind of Non-Banking Financial Company (NBFC), which could act as an account aggregator.

While RBI is silent on the causality of floating the concept, it appears that the objective is to make the functioning of the so called ‘wealth manager’s more transparent. Recently quite a few wealth managers of foreign Banks are under the lens for apparently shady deals.

RBI press release only mentions  that at present, persons holding financial assets, such as, savings bank deposits, fixed deposits, mutual funds, insurance policies, do not get a consolidated view of their financial asset holdings, especially when the entities fall under the purview of different financial sector regulators.

The wealth management services provided by many Chartered Accountants and almost all foreign / private Banks, who keeps a consolidated account of the wealth of a High Net Worth customer and also advises on the churning of the portfolios to derive best returns.

According to the discussion paper, while the Account Aggregators would be collecting and providing the information of customers’ financial assets in a consolidated, organised and retrievable manner to the customer, they will not support transactions in financial assets

While according to the direction, the investors will be able to avail the service of an Account Aggregator purely at their option, it appears in future the information may be a requirement for tax purposes.

Also Reserve Bank will regulate and supervise the activity of account aggregation with a view to ensuring that the services provided and the terms at which these are provided conform to prescribed standards. 

The crucial requirements to qualify as an Account Aggregator are that the company should be registered with the Reserve Bank as NBFC – AA with at least R 2 Crore net worth. So, all small time operators will be out.

RBI also clarifies that account aggregators will provide services under specific application by the customer and would be backed by appropriate agreements/ authorisations.

As an important stipulation, no financial asset related customer information pulled out by the account aggregator from the financial service providers should reside with the account aggregator. (KNN/ DB)