FM Sitharaman asks PSBs to join account aggregator system by July-end

Finance Minister Nirmala Sitharaman directed all public sector banks (PSBs) to onboard the account aggregator system — the Centre’s digital initiative to improve credit delivery— by July-end.

In a meeting with heads of PSBs and Regional Rural Banks (RRBs) to review operational and governance reforms in regional lenders, “Sitharaman instructed PSBs to onboard on account aggregator system by end of July”, said a statement from the Ministry of Finance.

Account aggregator ecosystem helps banks leverage digital data of customers, with their consent, to provide better service. 

Nine private banks — HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank, Federal Bank, IDFC First Bank, AU Small Finance Bank, and Karur Vysya Bank — are already live on the account aggregator system. Government-owned Union Bank of India has recently joined the platform with few other state-owned lenders actively working to join the system.

Sitharaman also asked PSBs, who act as sponsors and hold 35 per cent in RRBs, to prepare a road map to further strengthen regional lenders, and support the post-pandemic economic recovery. 

The Indian Banks’ Association (IBA) and sponsor banks have also been advised by the Finance Minister to assist RRBs with technological advancements and conduct workshops to share best practices.

The Centre had called the meeting to review performance of RRBs as one of the expert committees set up by the government has suggested to work out a viability plan for RRBs and monitor them based on key parameters, such as credit expansion, business diversification, cost rationalisation, technology adoption, among others.

The review meeting was also attended by Minister of State for Finance Bhagwat Karad, Minister for Fisheries, Animal Husbandry and Dairying Parshottam Rupala, Financial Services Secretary Sanjay Malhotra and senior officials from Department of Financial Services.