RBI adds GSTN in financial information providers list under account aggregator norm – know what experts say

The Reserve Bank of India (RBI) on Wednesday said the Goods and Services Tax Network (GSTN) has been included in the list of financial information providers under the Account Aggregator framework to facilitate cash flow-based lending to MSMEs (Micro, Small, and Medium Enterprises).

An Account Aggregator (AA) is a type of RBI-regulated entity (with an NBFC-AA license) that helps an individual securely and digitally access and share information from one financial institution they have an account with to any other regulated financial institution in the AA network.

"Department of Revenue shall be the regulator of GSTN for this specific purpose and Goods and Services Tax (GST) Returns, viz. Form GSTR-1 and Form GSTR-3B, shall be the financial information," the Reserve Bank said. GSTN, the technology backbone of GST, has 1.40 crore registered taxpayers.

The list of financial information providers includes banks, non-banking financial companies, asset management companies, depository, depository participants, insurance companies, and pension funds.

Here’s What Experts Say On RBI’s This Move

Expert: Sanjeev Chandak, Co-founder & CEO of ftcash

RBI’s decision to bring GSTN under payment aggregator framework will be very powerful as financial institutions would be able to assess the credit worthiness of the small business owners through verifiable data.

MSMEs will have access to institutional credit and will no longer have to go to private money lenders for loans when there is a requirement.

This will also help small business owners to build their credit history which enables them to tap into larger loans when they want to scale up their business and need capital.

Access to institutional credit eventually helps business owners to grow and scale up and we have seen this already happen in developed economies.

Note: ftcash, a financial services company, envisions to empower micro-merchants and SMEs through financial inclusion using digital payments and loans.

Expert: Avinash Godkhindi, MD & CEO of Zaggle

This RBI Policy is a boon for the MSME fraternity as it will facilitate cash flow-based lending to them by including Goods and Services Tax Network (GSTN) in the list of financial information providers under the Account Aggregator framework.

In essence, an account aggregator enables the sharing of data between individuals and financial institutions they have an account with, to any other regulated financial institution.

This will enable seamless real-time authentication of GST data which would also be 100 per cent reliable. Lenders can thereby review this information on the fly before providing a loan.

Note: Zaggle builds world-class financial solutions and products to manage the business expenses of corporates, SMEs, & Startups through automated and innovative workflows.