From Digital Footprints To Data Capital: How Account Aggregators Are Solving Credit In India

Ramesh, who runs a small kirana shop in a semi-urban town, sees most of his revenues flow in through Unified Payments Interface (UPI) payments to his current account. Yet when he seeks a loan to expand his inventory, he is turned away for lack of credit history or collateral.

His story reflects a wider paradox: millions of small entrepreneurs leave clear digital footprints but remain "thin-file" borrowers in the eyes of traditional lending institutions.

Financial technology companies, or fintechs, and Non-Banking Financial Companies (NBFCs) have tried to plug this gap using Short Messaging Service (SMS) or email data, but such methods are patchy and insecure. At the same time, traditional lenders have been reluctant to rely on fragmented and non-standardised data-sharing mechanisms.

The Account Aggregator (AA) ecosystem breaks this deadlock by allowing borrowers to consolidate and consent to share financial data directly across institutions in a standardised and secure manner.

For customers like Ramesh, this enables cash-flow-based credit assessments instead of dependence on collateral; for lenders, it opens up scale without compromising prudence.

The ecosystem is already gaining ground: an estimated Rs 1.67 lakh crore was disbursed across 189 lakh loans using AA in fiscal year (FY) 2025, with an average ticket size of Rs 88,457. In effect, AA converts digital transaction trails into "data capital," giving individuals a fairer shot at credit, and expands markets for institutions without lowering underwriting standards.

Diluting Systemic Barriers: From Exclusion To Inclusion

Millions of Indians face structural hurdles in accessing formal credit. Many have limited or no documented credit history, little collateral, or low financial legibility, leaving traditional lenders hesitant to provide loans.

Unsecured or minimal-underwriting loans have been the main option for thin-file or no-file borrowers, but high processing and underwriting costs push ticket sizes beyond what many can realistically borrow, making formal credit largely inaccessible.

The AA framework, launched in September 2021, addresses this challenge. By allowing individuals and businesses to securely share verified financial data directly from regulated sources, AA improves financial legibility and enables lenders to assess creditworthiness efficiently. Lower underwriting costs make small-ticket lending economically viable at scale.

The results are tangible. One major bank now processes car loans in 30 minutes instead of weeks, saving Rs 9.75 crore in processing costs during their pilot alone. Processing costs dropped from Rs 400 to just Rs 90-100 per application.

A leading NBFC reports an additional Rs 310 crore in monthly disbursements, representing a 5-10 per cent boost in lending capacity across their product lines.

How It Actually Works

When Ramesh applies for a loan, he receives a consent request detailing: the type of data being accessed, the range of data required, the purpose of sharing (credit assessment), and the duration for which it will be used. He can choose which account and which financial institution to share data from.

The AA framework was developed through joint consultations of India's financial sector regulators, the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Pension Fund Regulatory and Development Authority (PFRDA), under the Financial Stability and Development Council (FSDC), anchored by the Ministry of Finance.

It is a "techno-legal" system that aligns with the principles enshrined in the Digital Personal Data Protection (DPDP) Act, embedding privacy safeguards and consent-based controls directly into the infrastructure. These safeguards ensure that financial data sharing is secure, standardised, and legally compliant, with oversight from all four regulators.

Since its launch, the framework has achieved remarkable cross-sectoral adoption. Today, 748 financial institutions operate as financial information users, 179 as financial information providers, and 16 licensed AAs facilitate secure transactions.

Two hundred and twelve crore financial accounts are enabled for consent-based sharing, making 60 per cent of India's financial accounts available on the network.

As of August 2025, the ecosystem has processed 28.9 crore successful consents and linked 20.8 crore accounts, unlocking opportunities for customers like Ramesh, who were previously invisible to the formal financial services industry.

The GST Game-Changer For Small Business

The Department of Revenue under the Ministry of Finance has integrated the GST Network (GSTN) into the AA ecosystem, bringing taxation data, Goods and Services Tax (GST) receipts, and filings into the data-sharing purview of the ecosystem.

This marks a truly cross-sectoral expansion, linking tax, banking, and other financial data to help lenders better understand business performance for the credit assessment process of small businesses.

By combining GST receipts with banking and other financial data, lenders can now build detailed, machine-readable credit profiles, making loans under Rs 1 lakh economically viable.

Early pilots for invoice-based lending are promising, and as automated data sharing scales, banks and NBFCs may increasingly extend credit to thin- or no-file borrowers, transforming small-ticket lending for millions of micro enterprises like Ramesh's and expanding access to formal finance across the sector.

Street-Level Impact: From Informal To Formal

The AA ecosystem is opening the doors of formal financial services to customer segments that were previously unserved, marking a significant step towards true financial inclusion. In FY25 alone, 189 lakh loans were disbursed using the AA framework, with an average ticket size of Rs 88,457, bringing millions of individuals into the formal credit system on terms far better than they could previously access.

Beyond access, AA gives customers full agency and control over their financial data, allowing them to choose their service providers. This shift not only improves convenience and transparency for borrowers but also fosters a more competitive, innovative, and user-centric financial services industry, creating a pathway for small businesses and thin-file borrowers to participate meaningfully in the formal economy.

Beyond Banking: Insurance And Wealth Management

Although lending is an obvious use case and the ecosystem has gained significant traction there, in FY25, the AA framework has truly entrenched itself as a cross-sector enabler of financial services. Personal finance management is expanding rapidly, with 204.69 lakh users served in FY25, including 163.75 lakh through Registered Investment Advisors (RIAs).

AA has also enabled 84.20 lakh income verifications for opening futures and options trading accounts, reflecting growing adoption in investment services. We also observe portfolio managers leverage the ecosystem for net-worth assessment and holistic risk-profiling of clients for a more contextual and relevant investment strategy.

Insurance adoption remains nascent but promising. In FY25, 0.33 lakh life insurance policies were issued via AA-enabled journeys, with early results suggesting faster underwriting and greater inclusion for self-employed and low-income customers.

A life insurance company has reported that around 50 per cent of customers now opt for AA-led journeys, with 8 per cent better policy issuance rates and a 30 per cent reduction in underwriting time. One insurer saw the proportion of self-employed customers nearly double and low-income customers increase sevenfold after implementing AA.

The Sahamati Story: Building Infrastructure Through Patient Work

The AA framework was laid down in the AA Master Directions published by the RBI in 2016. Recognising the transformative potential of this framework for the financial services industry, the early believers in the market established Sahamati to operationalise and institutionalise the AA framework.

Since then, Sahamati's approach has been deliberate and patient, focusing on building trust, aligning with regulators, and fostering institutional adoption rather than chasing rapid growth.

By late 2019, the ecosystem was working collaboratively towards pilots and a managed roll-out, laying the groundwork for the September 2021 public launch.

This methodical approach has been critical to scale financial infrastructure, which requires patience, credibility, and collective ownership. By anchoring collaboration and building the rails of trust, Sahamati created the conditions for the AA ecosystem to scale sustainably, unlocking a model where millions of Indians can participate in a more open, inclusive, and user-centric financial system.

The Awareness Challenge And Path Forward

Despite strong institutional adoption, the biggest challenge the ecosystem faces is customer awareness. For most people, the AA infrastructure works quietly in the background; few realise that the faster loan approval, smoother insurance journey, or sharper personal finance dashboard they experienced was powered by it.

Yet this is also the biggest opportunity today: closing this awareness gap could unlock the ecosystem's next wave of growth. A nationally representative survey by CGAP and Sahamati in October 2024 shows just how large that opportunity is.

While active usage is still building, 71 per cent of respondents, up from 33 per cent in 2023, said they would consider sharing data through AA if it meant access to financial services at better terms.

Once customers clearly see the value and safeguards, adoption can scale rapidly. The next phase will hinge on converting this latent willingness into active participation: through simpler communication, intuitive consent flows, and benefits that show up in everyday financial decisions.

Looking Forward: Open Finance And Global Impact

The AA framework is only the beginning. With the passage of the DPDP Act, India now has the legal foundation for similar consent-based data-sharing infrastructures to take shape in other sectors: health, education, employment, e-commerce, and beyond. Over time, these parallel infrastructures will converge, creating the conditions for a fully functional open data regime.

In such a regime, individuals will exercise full control and agency over their digital footprints, choosing when, where, and with whom to share data. This shift opens the door to personalised and responsive services, from tailored credit and insurance products to education loans linked to employment outcomes, or health insurance calibrated to real health data rather than crude proxies.

As artificial intelligence and agentic systems grow in influence, India's sovereign, consent-driven data rails will ensure that innovation does not come at the expense of individual rights. By embedding privacy and user choice into the very architecture of data flows, the country is laying the groundwork for a digital economy where trust and empowerment are not trade-offs but design principles.

The AA framework has proven that consent-based data sharing works at the population scale while maintaining security. In three years, it's moved from concept to infrastructure, enabling hundreds of thousands of crores in credit disbursements with zero fraud rates, a remarkable achievement in a country where document fraud was previously endemic.

For Ramesh and millions like him, the framework creates pathways from informal, exploitative credit to regulated, competitive financial services. Street vendors, small manufacturers, and service providers now have potential access to formal credit based on their digital transaction histories rather than traditional collateral.

The AA framework represents practical progress towards financial inclusion, not through regulation or subsidy but by giving people control over their financial data. In a world moving towards open finance, India's implementation provides both inspiration and a working blueprint for putting people at the centre of their financial lives.

As it matures and expands, it offers a model for how digital infrastructure can address persistent development challenges through consent, transparency, and technological innovation.