FinTech and BFSI – Sector-specific Guidance for DPDP Compliance
- Blog|Company Law|
- 3 Min Read
- By Taxmann
- |
- Last Updated on 4 May, 2025
Latest from Taxmann
DPDP Compliance refers to adhering to the provisions, obligations, and regulatory requirements set out under the Digital Personal Data Protection Act, 2023 (DPDP Act). This Indian legislation governs how personal data is collected, processed, stored, transferred, and deleted, ensuring the protection of individuals' digital privacy rights.
Table of Contents
- Intersection of DPDP, RBI Master Directions & PMLA
- Lawful Bases Mapping
- SDF Probability Matrix for FinTechs
- Incident‑Response Dual‑Reporting
- Credit‑Scoring Exemption
- Outsourcing & NBFCs
- Conclusion
Check out Taxmann's Digital Personal Data Protection Act 2023 with Draft Rules – Bare Act with Section Notes which offers a robust framework for India's data privacy landscape. It clarifies rights and safeguards for Data Principals, details obligations for Data Fiduciaries, and highlights recent legislative updates from statutes like the IT Act and RTI Act. Comprehensive Section Notes and FAQs delve into key principles such as consent and cross-border transfers, simplifying complex provisions for easy reference. The book's structured approach, with illustrations, indexes, and a clear layout, caters to legal practitioners, corporate counsels, regulators, students, and IT professionals.
1. Intersection of DPDP, RBI Master Directions & PMLA
- RBI already mandates localisation of payment‑system data and cybersecurity controls.
- DPDP adds individual rights, children’s provisions and penalties outside RBI’s ambit.
- KYC retention (10 years post‑account closure) prevails over erasure requests (Sec 12 proviso).
2. Lawful Bases Mapping
| Processing Activity | Pre‑DPDP legal basis | DPDP legal basis | Note |
| Aadhaar e‑KYC | Section 3 PMLA Rules | Sec 7(2) State function | Consent is optional; ensure purpose limitation. |
| Transaction fraud analytics | RBI Circular | Section 7(7) employment/loss‑prevention | Document DPIA; anonymise wherever possible. |
| Marketing cross‑sell | Implied consent | Explicit Sec 6 consent | Implement an opt‑in campaign strategy. |
3. SDF Probability Matrix for FinTechs
| User Base | Data Sensitivity | Likely SDF? |
| > 50 lakh retail wallets | High (financial) | Yes (DPO + audit) |
| 2 lakh B2B ERP accounts | Moderate | Possibly |
| 50k crypto‑trading app | Very‑high + sovereignty risk | Yes |
4. Incident‑Response Dual‑Reporting
mermaid
CopyEdit
graph TD
Breach–>CERTIN[Notify CERT‑In 6 hrs]
Breach–>DPB[Notify DPB 72 hrs*]
Breach–>RBI[Notify RBI 24 hrs]
*Draft Rule proposal
5. Credit‑Scoring Exemption
Section 17 (4)(f) exempts processing “necessary to ascertain creditworthiness”. However, source data collection still needs consent/legal basis. CRCs must also honour correction requests under CIBIL Regulations.
6. Outsourcing & NBFCs
- NBFC must ensure the cloud or BPO vendor signs the DPDP SCC.
- RBI Outsourcing Guidelines (2023) require a < 2-hour breach notice from the vendor; reconcile with DPDP 72 hours to the regulator.
7. Conclusion
FinTech firms already accustomed to RBI compliance must layer DPDP rights management on top of existing security and localisation stacks. Early cross‑regulator mapping avoids duplicate effort.
Dive Deeper:
Overview of Digital Personal Data Protection Act (DPDP Act) 2023
Scope and Key Definitions Under DPDP Act
Rights of Data Principals under the DPDP Act 2023
Lawful Processing and Consent under DPDP Act 2023
Cross‑Border Data Transfers under the DPDP Act 2023
Obligations of Data Fiduciaries under DPDP Act 2023
Data Privacy Breach | Enforcement | Penalties under the DPDP Act
DPDP Act Compliance Checklist for Businesses
DPDP Act vs IT Act – Shifting India’s Data‑protection Paradigm
DPDP Act vs EU GDPR Compliance – A Comparative Analysis
DPDP Act Impact on Startups and SMEs in India
DPDP in Healthcare Ecosystem – HealthTech and Hospitals
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