How the inclusion of GST in the Account Aggregator Ecosystem
can revolutionize Lending for MSME Sector

In recent news, the Goods and Services Tax Network will now also be a financial information provider under the account aggregator framework, the Reserve Bank of India announced in a press release.

The RBI announcement aims to promote cash flow-based lending to micro, small, and medium-sized businesses (MSMEs) as shared in a press release on Wednesday (November 23, 2022). According to the central bank, the action is intended to make it easier for small and medium-sized businesses to get loans based on cash flow. With the use of an Account Aggregator, Individuals, small businesses, and medium-sized enterprises may access services like securely exchanging financial data online with banks and other authorized financial organizations. The GST network would store the GST data of a company which would help financial institutions calculate an MSME’s cash flow and extend loans.

  • The RBI’s action aims to make cash flow-based financing easier for MSMEs.
  • Six account aggregators have received licenses from the RBI thus far, while nine more have received in-principle approval.
  • Stock market watchdog SEBI also joined the network earlier this month.

In order to implement GST across the nation, the GST Network offers information technology infrastructure and services to the central and state governments, taxpayers, and other stakeholders.

According to the RBI, “Department of Revenue shall be the regulator of GSTN for this specific purpose, and the financial information shall be the Goods and Services Tax (GST) Returns, viz., Form GSTR-1 and Form GSTR-3B.”

GST in Account Aggregator


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    What steps will be taken? 

    To adjust for the GST, the RBI will be adding new clauses to three paragraphs under Section 3 of the 2016 Master Direction—Non-Banking Financial Company—Account Aggregator (Reserve Bank) Directions.

    According to the Master Direction, a FIP is a bank, banking company, non-banking financial business (NBFC), asset management firm, depository participant, insurance company, insurance repository, pension fund, and now GST.

    Click here to find out more about the functioning of the account aggregator ecosystem.

    Account aggregators are regulated AA-NBFCs with RBI licenses that were created in 2021. AAs help facilitate the flow of financial data between FIPs and consumers of financial information (FIUs). The RBI has so far granted licenses to six AAs in India, and it has granted in-principle permission to another nine AAs. Earlier, the finance minister had asked public sector banks to sign up for the network first. The AA network has been encouraged to spread more quickly by the Indian government. The organization that regulates the stock market in India, the Securities and Exchange Board of India (SEBI), also joined the network last month.

    How is AA controlling the lending scams and the new lending experience? 

    The rationale for the AA framework’s implementation is that customer information is currently dispersed and is only useful if it can be integrated and easily accessed in the databases of banks, financial institutions, insurance companies, and governmental organizations. Authorized account aggregators may give customers financial information, including bank statements, tax returns, GST returns, and other reports, in order to facilitate safe and easy data interchange with credit institutions. Adopting the AA framework streamlines the procedure and lowers the cost of asset management for consumers, thereby lowering the likelihood of loan fraud.

    What benefits may Financial Organizations expect from Novel Patterns – CART “A Complete CAM Automation Platform & Account Aggregator Ecosystem Enabler” ? 

    In order to solve issues and assist with document digitization and assessment automation, Credit Assessment and Robotic Transformation (CART) is a solution that combines the power of sophisticated financial analytics with AI and ML. It aids in automated credit underwriting and financial assessment, cutting down on turnaround time (TAT) and operating expenses while also being a more efficient and precise evaluation. Lending operations are made SMART with C.A.R.T. 

    Fast client onboarding and swift fraud detection are made possible by CART. In the ecosystem, CART – Enabling the Account Aggregator Ecosystem serves as a Technical Service Provider (TSP), operating as a single point of contact for all integrations, commercial conversations and negotiations, contracting, billing, support, and other matters pertaining to the AA ecosystem. Financial institutions will get AA, FIU, FIP, certification, and analytics all in one place.

    Enabling the account aggregator ecosystem
    The key features of CART that can benefit the banking and financial sectors are:
    1. In-Built Advanced Analytics-Based Insights:

    CART enables companies to track every cent; monitoring your clients’ activities will assist FI’s in staying secure from fraud. If there is an irregularity in any portion of their transaction history or spending patterns, that will be recognized using Artificial Intelligence (AI) and Machine Learning (ML).

     2. All Technological And Functional Enablement Has A Single Point Of Contact:

    CART serves as a single point of contact for all integrations, commercial engagements, and discussions with all AAs, as well as offering FIU and FIP modules, enabling the entire end-to-end certification process, and putting Analytics on top of it for a single one-stop solution.

    3. Fraud Detection System:

    In order to keep financial information safe, it’s critical to be vigilant about security and take a data-driven approach to fraud detection. CART’s fraud detection is simple and cost-effective in cases where documents are required for income assessment. Advanced algorithms are coupled with image analytics to move ahead of other peers for better fraud detection and a reduction in false positives.

    4. Commercial Benefits:

    As a premier partner to all other organizations in the ecosystem, CART enables aggressive commercialization, which turns out to be the most significant proposal for the bank or NBFC aiming to streamline procedures and decrease operational costs. 

    About the organization 

    Novel Patterns is headquartered in Noida, U.P., and is an advanced analytics-based fintech organization dealing in B2B business, helping banks and financial institutions streamline their processes across different verticals. 

    Currently, with 75+ customers and an average growth of almost 25%+ month on month, Novel Patterns is expanding globally with exponential growth and leaving footprints all across the globe. We are able to help customers from all around the world, including but not limited to the Middle East, the United States, and the UK region, streamline their processes and enhance the customer experience. More details about the product and organization are available on the company website.

    As digital enablers of the Account Aggregator Ecosystem, CART is like having a financial assistant manage all aspects of income verification, credit monitoring and finances management for your clients. Reach out to us to learn more about how we can help you.