Focus: GS-II Governance
Why in news?
The Reserve Bank of India has sought exemption from the country’s proposed Personal Data Protection Law for its regulatory, policy, and supervisory functions, and also does not want financial data of individuals to be classified as sensitive personal data, according to people familiar with the matter who spoke on condition of anonymity because the law is yet to be finalised.
- RBI said that eating financial data as sensitive personal data may have a “dampening effect” on India’s efforts at financial inclusion.
- RBI routinely deals with lots of data on banks and financial institutions in its role as a regulator and supervisor and has data on the clients of banks; and much of this is needed to ensure compliance, prevent frauds, and ensure the smooth running of the system.
The Cost involved
- Objecting to classification of financial data as sensitive personal data, RBI’s note maintained that this would lead to higher compliance and explicit consent, which would translate to increase in costs for providing services to customers.
- Financial inclusion efforts rely on lower service charges for offering basic banking services.
- The increase in costs would compel banks to increase the charges associated with offering banking services.
How it is dealt with in other coutries?
- The UK and Europe’s data protection laws exempt central banks from their purview, and also do not classify financial data as sensitive personal data; only biometric and health data, and such things as sexual orientation, religious beliefs, union membership and political opinion are classified as sensitive personal data in these countries.
- The latter require special and extra security while processing.
Personal Data Protection Bill and the DPA
- The Personal Data Protection Bill, 2019 entrusts the DPA with the mammoth task of protecting the right to privacy of 1.3 billion Indians by regulating approximately 600 million entities, including the proliferating digital ecosystem of both the government of India and the states.
- As opposed to a sectoral regulator like SEBI, IRDA, TRAI etc, it is a sector agnostic body and has wide powers cutting across different sectors and economic spheres with powers to penalise not only both central and state governments but also other fourth branch watchdogs such as Comptroller and Auditor General of India and the Election Commission and even more significantly, the legislature and judiciary itself.
- For impartial and effective discharge of its crucial role, there is a need for the DPA to have sufficient capability to discharge its functions.
- The independence of the DPA is the foremost criterion for meeting such a requirement and a necessary prerequisite for a free and fair cross border transfer of data.
-Source: Hindustan Times