Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
5. RBI’s Account Aggregator framework is an encouraging stimulus for easing of credit flow in the economy, especially for the MSME sector. Comment. (250 words)
Difficulty level: Moderate
Reference: Financial Express
Why the question:
The Reserve Bank of India launched the account aggregator framework aimed at making financial data more easily accessible.
Key Demand of the question:
To write about the role Account aggregators can play in improving credit flow in the economy as well as credit flow to the MSME sectors.
Structure of the answer:
Begin by explaining what is an account aggregator.
First, write about the issue of customer data being fragmented in databases of banks, lenders, insurance companies, government bodies, and RBI’s account aggregator being a solution for seamless and secure data sharing digitally.
Also mention the benefits to MSME such as quick link of data, no need for a physical collateral, lack of organised records of financial statements pushes MSMEs to secure credit through informal channels etc and this promotes a fast access to small formal credit.
Conclude by mentioning that and RBI’s Account Aggregator framework is a step in the right direction and further steps that are needed to make it secure and effective.