Page 52 - Banking Finance February 2025

ARTICLE

Banking in the Era of

"Data Privacy": Impact of

Digital Personal Data

Protection Act (DPDPA) Abhijit De

Chief Manager (Research)
on the Banking Industry State Bank Academy, Gurugram

In modern world, data is a valuable asset which helps in the revenue generation process of a
company/organization. Hence, it needs to be handled responsibly and protected from potential
misuse. In the context of business, the DPDPA intends to protect customer information and has
the potential to disrupt the way business houses function in terms of processing personal data.

"Data Protection" is the new buzz phrase among the processing personal data. The impact of DPDPA will be felt
stakeholders of the Data Processing industry. The concept across industries; be it Information Technology, Manufactur-
has gained importance in recent years, particularly in the ing, Trading, Health Care, Banking, Financial Service & In-
context of growing personal data breach incidents over the surance (BFSI), Education or any other.
years and consequent use and misuse of such unauthorized
personal data. A watershed moment in the domain of per- DPDPA will have a substantial impact on the financial sec-
sonal data protection in India has been the passage of Digi- tor in general and banking sector in particular. Banks col-
tal Data Protection Act, 2023 (DPDPA). It provides legal lect a lot of personal data during their routine business ac-
recognition to an individual's right to protect personal data. tivities. Hence, it is incumbent upon banks to comply with
It aims to provide the common man full control over his specific regulations of DPDPA when collecting, storing, pro-
personal data.The Act grants certain rights to Data Princi- cessing, or sharing personal data of customers. Banks will
pal (individual to whom the personal data relates) and at need to adapt their operations to comply with the new data
the same time mandates specific obligations for entities protection regime. As a matter of fact, banks have been
that are responsible for deciding the means and objective complying many of these areas as mandated under various
of processing personal data"(Referred to as "Data banking regulations and Acts.
Fiduciary"in the Act).
Therefore, there are chances that certain provision of
In modern world, data is a valuable asset which helps in the DPDPA might overlap with several existing sectoral laws and
revenue generation process of a company/organization. regulations, creating a complex regulatory landscape. Inte-
Hence, it needs to be handled responsibly and protected grating the DPDPA framework in the bank's processes will
from potential misuse. In the context of business, the DPDPA involve significant investments in technology, processes, and
intends to protect customer information and has the poten- training of personnel .Against this backdrop, this piece aims
tial to disrupt the way business houses function in terms of to shed light on the various provisions of DPDPA having

46 | 2025 | FEBRUARY | BANKING FINANCE