India is making rapid strides on the digital esp fintech front. What according to you will be the impact of account aggregator system?
This news is bad for people / businesses surviving on credit Cards / OD’s, utilizing personal loans / overdrafts across banks for personal consumption or as working capital, But good for banks to reduce NPA’s.
When the account aggregator data sharing kicks in, your overall credit utilization across all banks you have accounts with will be limited to x times your income / cash flow.
At the moment, each bank you have an account with allots x times your income / cash flow. The present system is flawed in a way that these banks combined have overleveraged credit exposure on each individual / business. If someone decides to max out their credit limit on all the banks, they will never be able to repay it back given their income / cash flow , eventually creating bad debts for these banks.
All those people with too many credit cards on display in their wallets when at the supermarket checkouts , will have less cards to show off after the account aggregator system goes live.
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In that case, it’s good for banks as bad loans will fall
With all the major PSUs joining the Account aggregator framework, 1.1 billion accounts are live.
Here’s a nice read on this topic :
If brokers like Zerodha join AA system in future, many options traders will become ineligible for any loan. Looking at their losses, no bank would lend them.
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