FM Sitharaman Asks Banks To Sign Up For Account Aggregator Framework To Improve Credit Flow And Promote Digital Lending

Union Finance Minister Nirmala Sitharaman on Tuesday (22 February) exhorted all the banks to sign up for the Account Aggregator framework, saying that it will improve credit flow and promote digital lending, said an official release.

Sitharaman on Tuesday (22 February), while chairing the post-budget meeting with heads of banks, Non-Banking Financial Institutions (NBFCs) and financial institutions in Mumbai, also the directed them to run pilots for Account Aggregator model and cashflow-based lending.

The meeting was attended by Union Minister of State for Finance Bhagwat Kishanrao Karad and Chief Economic Adviser V Anantha Nageswaran among others.

The heads of all Public Sector banks, select Private Sector Banks, NBFCs and Financial Institutions were also present in the meeting.

Underscoring the importance of information sharing and collaboration, the Finance Minister exhorted all the banks to sign up to the Account Aggregator model which would facilitate seamless flow of credit for small borrowers and promote digital lending, the Finance Ministry said in a statement.

The minister directed that pilots for Account Aggregator model and cashflow-based lending may be replicated in different regions around the country including in the North Eastern Region, on the lines of the initiative by two banks in Varanasi district.

The meeting deliberated on the various budget announcements in the context of PM GatiShakti, defence, telecom, manufacturing and exports, Emergency Credit Line Guarantee Scheme (ECLGS) and tax concessions to new manufacturing units and start-ups, which offer new opportunities to the financial sector, the ministry said.

Further, various schemes and programmes such as subordinated debt to MSMEs, KCC, Aatma Nirbhar Bharat Schemes and credit outreach programme which provided immediate relief to the borrowers and the banks, from the impact of the COVID-19 pandemic, were also discussed during the meeting.

"It was emphasised that digital banking, digital payments and fintech innovations are an opportunity for banks to find new ways to reduce the cost of intermediation and provide cost-effective services and that the benefits of digital banking should reach every nook and corner of the country in a consumer-friendly manner," the ministry said.

Further, it was stressed that banking industry should target to open accounts of unbanked adults under Jan Dhan Yojana and ensure Insurance and pension coverage to all eligible adults.