How account aggregation is redefining credit underwriting in India’s digital economy

India’s financial sector is among the most diverse in the world, with an enormous range of providers serving equally varied consumers. At one end of the spectrum are large public and private sector banks offering everything from secured business loans to unsecured personal credit. At the other, local moneylenders continue to meet small-ticket needs. Between them operate cooperative banks, regional rural banks, small finance banks, NBFCs, and microfinance institutions.

While products, customers, and delivery models differ, one process unites them all — credit underwriting. It lies at the heart of every lending decision, determining whether a borrower is eligible for credit and under what terms. Lenders traditionally rely on parameters like the Fixed Obligation to Income Ratio (FOIR), credit score, cash flow patterns, and residence stability to evaluate applicants.

Loan applications arrive through multiple channels — branches, direct selling agents (DSAs), digital platforms, and proprietary loan journeys. Historically, most branch and DSA applications were paper-based. Applicants filled forms, self-attested documents, and submitted physical copies. These were then couriered or scanned and sent to regional or head-office credit teams. Depending on the loan amount, applications travelled through several approval layers, taking anywhere from three to fifteen days to reach a decision.

If rejected, borrowers often turned to the next lender in line — typically at a higher cost of borrowing.

That once-reasonable turnaround time now feels painfully slow. In a world where groceries arrive in ten minutes, borrowers expect loans to move just as fast. The 1990s introduced India to ATMs, net banking, and credit cards. The 2010s brought UPI and mobile banking, which revolutionised how people transact and manage finances.

Today, customers rarely visit bank branches — they invest, transfer, and spend entirely online. The question naturally follows: why should borrowing remain old-fashioned?

For lenders, too, the manual model is a drag on efficiency and risk management. Armies of employees manually verifying reams of documents is neither scalable nor secure. Optical Character Recognition (OCR) tools improved speed but were far from perfect. The result was predictable — fraudulent or doctored PDFs slipping through the cracks, leading to rising losses, particularly in unsecured loans.

This “paper trail problem” demanded a structural fix.

Imagine a credit system where lenders access verified financial data — such as bank statements, deposits, and asset holdings — directly from the source, with user consent.

No photocopies, no middlemen, no fraud. That is the promise of Account Aggregation (AA) — a consent-based data-sharing framework regulated by the Reserve Bank of India (RBI). The first Master Directions were released in 2016, and the ecosystem officially went live on September 2, 2021.

Through secure APIs, AAs enable individuals to share their financial data across institutions digitally, end-to-end encrypted, and only after explicit consent. For lenders, this is a game-changer.

The benefits are far-reaching:

What was once a 10–15 day process can now happens in as little as 10 minutes — a coincidence that rivals delivery apps, but with far greater impact on economic productivity.

The AA ecosystem started gradually — as with every great innings, even legends like Viv Richards or Brian Lara needed time to build momentum. But its growth trajectory today is unmistakable.

Forward-looking institutions such as Bajaj Finance, Axis Bank, and Navi have already integrated AAs into their credit journeys, realising faster loan processing, improved fraud detection, and superior customer experience. Many others are actively building digital underwriting models around this infrastructure.

The shift is no longer about if, but how fast India’s lenders can transition to an AA-first model. In a data-rich economy where trust, transparency, and turnaround time define competitiveness, Account Aggregation may well become the new credit backbone of the decade.

As the AA ecosystem scales, its implications go beyond credit. It represents a foundational layer of India’s digital public infrastructure, complementing UPI, Aadhaar, and OCEN. By allowing individuals to securely share and control their data, AAs empower citizens while unlocking enormous efficiency gains for the financial system.

It’s a future where physical passbooks, cheque books, and couriered loan files belong in museums — and consent-based data rails drive India’s next leap in financial inclusion.