Episode 4: Account Aggregators – The Missing Links in India’s MSME Credit Revolution

BEYOND RATIOS SERIES

Introduction

Imagine Suresh, who runs a small engineering job works unit in Rajkot, Gujarat. He fabricates precision parts for local textile machinery manufacturers. Most of his payments come via NEFT or UPI from three mid-sized clients. His account reflects ₹2.2 lakh in monthly credits — all verifiable, digital, and consistent.

Account Aggregator

Yet when he applied for a working capital facility, the branch manager flipped through his file and said, “Where’s your last three years’ audited balance sheet and collateral documents?”

Suresh, perplexed, opened his bank app: “Aren’t these monthly credits proof enough of my business activity?”

This mismatch — between authentic digital trails and legacy credit comfort zones — is exactly what the Account Aggregator (AA) framework was meant to bridge. But even in 2025, it remains underutilized in mainstream MSME underwriting.

1. AA: A Brilliant Blueprint, Yet to Scale

The RBI’s Account Aggregator framework was designed to give borrowers control over their financial data and enable lenders to make data-backed credit decisions, especially for thin-file MSMEs.

But the results so far are mixed:

• Hit rate of ~40% data fetch success in early use cases

• Patchy participation from major private banks (Axis, Federal, CSB, KVB, etc.)

• Underwhelming adoption in MSME credit pipelines

In principle, AA should allow:

✅ Real-time account data fetch✅ Income pattern recognition

✅ Consent-based, secure sharing

But in practice, lenders are still stuck in a comfort zone of paperwork.

2. Who Is Using AA Effectively?

Fintechs and NBFCs targeting salaried gig workers and urban micro-enterprises are leading the charge:

Segment	Adoption Level	Use Case
Digital lending NBFCs	High	Bureau + AA-driven underwriting
Neo-banks	Medium	Alternate scoring for retail/gig credit
PSU Banks	Growing	Pilots in ECLGS, personal loans
Private Banks	Low to Patchy	Limited MSME penetration

A heatmap visualization clearly shows that effective usage remains confined to niche lenders — while the vast MSME segment remains underserved.

Account aggregator Heat Map

3. Why Are Mainstream Banks Still Holding Back?

Despite being ‘live’ on Sahamati’s registry, many banks do not actively process AA data. Some reasons:

• Legacy Core Systems: Not AA-ready for seamless data fetch

• Risk Aversion: Preference for audited/verified static documents

• Customer Reluctance: Users unwilling to give digital consent or unaware

• Limited Internal Usage: Credit teams not yet trained to interpret AA insights

Bank	AA FIP Status	MSME Use Case Deployment	Reason for Limited Usage
Axis Bank	Live	Partial	Legacy core systems integration gaps, inconsistent AA returns
Federal Bank	Live	Minimal	Consent UX friction, limited MSME-focused use cases
Karur Vysya Bank	Live	Very Low	Small FIU coverage, low AA API readiness
CSB Bank	Live	Very Low	Rural/SME coverage gaps, low digital onboarding
City Union Bank	Live	Limited	Focused on traditional lending verticals
DBS Bank	Live	Limited	AA used primarily for retail/personal, not MSME
RBL Bank	Live	Low	Lack of deeper MSME integration via AA
Yes Bank	Live	Partial	Operational in retail, but minimal AA-driven MSME lending

4. Bridging Policy Intent with Ground Reality

The policy vision is crystal clear: use AA to democratize credit. But ground-level friction remains high.

“Bridge policy intent with grassroots realities” means translating lofty digital reforms into tools that actually work for Suresh the engineering job works entrepreneur, or Priya the gym trainer.

Seasonality, for example, is a huge factor. A fabrication unit earns peak income during production surges for textile clients but dips when orders are low. AA-based data can show these cycles — but only if banks look beyond point-in-time balances.

5. The Way Forward

Stakeholder	Actionable Step
Banks	Move from registry participation to use-case integration
MSMEs	Awareness of AA and digital consent mechanisms
Fintechs	Build AA-first scoring overlays, especially for cash-flow based models
Policymakers	Incentivize meaningful usage over mere compliance

Conclusion

India’s credit revolution cannot succeed without unlocking the power of real-time financial behavior. Account Aggregators were meant to be that key. But unless more banks, especially private ones, actively participate — we risk losing momentum.

Let’s not turn a promising reform into a missed opportunity.

Disclaimer:

The views expressed in this article are personal and intended for informational and thought-leadership purposes only. They do not represent the official position of any institution or employer. The examples used — including characters like “Suresh” — are fictional composites drawn from real-world scenarios for illustrative clarity. This article does not constitute financial advice, nor does it endorse any specific product, platform, or regulatory outcome. Readers are advised to consult appropriate professionals and verify facts independently before drawing conclusions or making lending decisions.