The Digital Personal Data Protection Act (DPDPA), 2023 is a game-changer for India’s financial ecosystem. For RBI-regulated entities like banks, NBFCs, payment aggregators, and fintech companies, compliance is not just a legal requirement but it’s essential for customer trust and operational integrity.

Let’s break down practical steps to ensure compliance without getting lost in legal jargon.

1.Understand the Scope

DPDPA applies to digital personal data collected online or digitized offline. For RBI-regulated entities, this includes:

• Customer KYC details (Aadhaar, PAN)
• Transaction history
• Mobile numbers, email IDs
• Sensitive financial data

2. Obtain Explicit Consent

• Before collecting data, ensure customers give clear, informed consent.
• Consent should be:
  • Specific (for a defined purpose)
  • Revocable (customers can withdraw anytime)
• Example:
  When onboarding a customer for a savings account, include a digital consent form explaining why data is collected and how it will be used.

3. Implement Data Minimization

• Collect only what is necessary for the service.
• Example:
  If you are offering a credit card, do not ask for unrelated details like family income unless required for risk assessment.

4. Strengthen Security Measures

• Use end-to-end encryption for data in transit and at rest.
• Enable multi-factor authentication for internal systems.
• Regularly conduct penetration testing and vulnerability assessments.

5. Appoint a Data Protection Officer (DPO)

• RBI-regulated entities handling large volumes of data must appoint a DPO.
• The DPO will:
  • Monitor compliance
  • Handle customer grievances
  • Liaise with the Data Protection Board of India

6. Create a Breach Response Plan

• Under DPDPA, data breaches must be reported promptly.
• Steps:
  • Maintain a 24×7 incident response team.
  • Notify RBI and the Data Protection Board
  • Inform affected customers transparently

7. Align with RBI Guidelines

DPDPA compliance should integrate with existing RBI frameworks like:

• Cyber Security Framework for Banks.
• IT Governance Guidelines
• Outsourcing of IT Services Circular (April 2023)

Example:

If you outsource cloud services, ensure the vendor complies with DPDPA and RBI norms.

8. Train Employees

• Conduct privacy awareness sessions.
• Include DPDPA compliance modules in onboarding programs.
• Example:
  • Train branch staff to handle consent forms correctly and avoid unauthorized data sharing.

9. Maintain Audit Trails

• Keep records of:
  • Consent obtained
  • Data processing activities
  • Breach reports
• This helps during RBI inspections and audits.

10. Prepare for Penalties

Non-compliance can lead to fines up to ₹250 crore.

Invest in compliance technology now to avoid future risks.

Checklist for RBI-Regulated Entities

• Consent Management System
• Data Encryption & Secure Storage
• Breach Reporting Mechanism
• DPO Appointment
• Employee Training
• Vendor Compliance Verification

Final Thoughts

DPDPA compliance is not just about avoiding penalties, it’s about building trust in India’s digital financial ecosystem. Start early, integrate compliance into your operations, and stay ahead of regulatory changes.