• Notification Date: 28-11-2022
  • Notification No: N/A

Experts on GST Data access via Account Aggregators offering comfort to MSME Lenders

The recent move of the Reserve Bank of India’s (RBI) to include the Goods and Services Tax Network (GSTN) as the latest Financial Information Provider (FIP) under the Account Aggregator (AA) framework is considered as a benchmark decision for availing easy access to bank credit by MSMEs. GSTN is the non-profit and non-government organization. It helps in managing the entire IT system of the GST portal. 

A new class of non-banking financial companies (NBFCs) is ruling the market. These are the Account aggregators (AAs) and they offer account aggregation services. The services provided by these companies are retrieving or collecting information of its customer pertaining to their financial assets or information. They consolidate, organize, and present it to the customer (such as a bank) or any other person as per the instructions of the customer and charge a fee in exchange. 

The information collected by the AA is consent-based and regarding MSMEs’ bank or NBFC deposits, SIPs, government securities, equity shares, bonds, mutual funds, insurance policies, exchange traded funds (ETFs), debentures, etc. After the RBI made the new announcement, GST Returns, viz. form GSTR-1 and GSTR-3B would also be available as information. GSTN joins the list of existing FIPs. The institutions under FIP are banks, NBFCs, asset management companies, depositories, insurance companies, pension funds, etc., and they provide related information to AAs. 
GSTN inclusion will provide the most authentic information of the borrower to lenders in the credit decisioning process for NBFCs in India. Many of these are into MSME lending. Raman Aggarwal, Director at Finance Industry Development Council (which a representative body of NBFCs in India) stated that GSTN provides an ultimate level of comfort, since an individual can never tamper with the GST data. The new measure taken by the RBI will reduce the time to disburse credit by banks.   

But a major obstacle in the success of AAs is the reluctance from MSMEs. They are unwilling to give their consent to share relevant data. However, a survey of over 1,000 MSMEs by Boston Consulting Group has shown that around 40 per cent of respondents are willing to share their data only if they receive personalised offers from banks such as lower interest rates, discount on processing charges, better customer experience etc.