Naavi.org

One of the major wars that Mr Narendra Modi has been fighting is the war against corruption. The demonetization was one such effort which flushed out the enormous amount of fake currency that Pakistan had pumped in. However either due to the fact that the amount of fake currency in circulation was incredibly high or the Indian Banking system was so corrupt that black money was easily exchanged through compromised Bank staff particularly in the cooperative sector, the demonetization exercise was not considered a success it perhaps was. In a way it dented the enthusiasm of Mr Modi also in tackling the black money menace.

One of the reasons why the black money in India persisted was that though holding of black money in the form of Cash was curbed to some extent in the demonetization drive, the presence of “Crypto Currencies” like the “Bitcoin” made it easy for black wealth to shift from cash and Swiss Bank form to Bitcoins and other private crypto currencies. It can be surmised that this digital black money was used to sustain the farmers agitations from Canadian sources and other anti India NGO and political  activities.  Despite the clear writing on the wall that Bitcoins were being used to subvert the country, the Modi Government did not respond due to the fear of the consequences that followed the physical demonetization.

Naavi.org has been fighting a parallel war on Bitcoins through scores of articles urging the Government to ban Private Crypto Coins. The war has been waged since 2013. Initially when I addressed the Bitcoin forum in Bangalore in their first conference, I highlighted the legal status of Bitcoin as an electronic document and held its validity as an electronic document. But I was trying to convince the Indian Bitcoin community to agree for a regulation to prevent use of Bitcoin as an anonymous currency. But the Bitcoin foundation refused to make any changes in projecting Bitcoin as a “Currency” which was illegal per-se and its promotions went from strength to strength to spread the mis-information that “Absence of a bar on the use of Bitcoins” is a “Legal approval of the Bitcoin”. The exchange owners continued to advertise and attract gullible investors and also distributed free bitcoins to regulators and industry captains to ensure that any opposition was neutralized.

One of the most unfortunate developments in the history of Bitcoins in India is the way the Supreme Court gave a thrust to the Bitcoin exchanges by scrapping the RBI circular. The judgment would be considered as one of the most innovative judgements for the students of Jurisprudence on how a judgement can say….”RBI has the powers to ban trading of Bitcoins by its licensees but the circular in question is disproportionately harsh”. I urge all students of law to go through this unique judgement 

Modi Government when Mr Ravishankar Prasad was the Minister of Law and IT was so paranoid about the Supreme Court’s views on its functioning that the Supreme Court judgement froze both the RBI and the Government regarding any regulation of Bitcoins. This was taken note of by the industry and slowly the companies which had closed their offices in India and moved to Singapore started returning to India. The recent IPL in Dubai was used for intense advertising and Bitcoins proliferated like wild fire.

We had in the meantime pleaded, requested and even teased and criticized the inaction on the part of the Government  including Mrs Nirmala Sitharaman, Mr Amit Shah, Mr Narendra Modi. We had pointed out that if there is a major loss to investors, investors would only blame the Modi Government and not the fraudsters.

Logically it was pointed out that any form of regularization of Bitcoins would cause the legit economic system to collapse, inflation to raise and the Cyber Crimes to increase.

It must be admitted that finally, I had personally lost hope and concluded that the “Power of Corruption” was stronger than “Narendra Modi” and the Government has reconciled to accepting the presence of digital black money. Passing of the Bill banning Private Crypto Currencies would prove that I was wrong and I am happy to be proved wrong in this respect.

We must remember that banning Bitcoins and other crypto currencies will make cyber criminals to pass their crime proceeds through  Banks which will help us track the crimes better. This should therefore reduce the Cyber Crime incidents of financial nature in due course.

We also need to recognize that “Banning” is also “Regulation” and is well within the rights of the Government. I am sure that the Bill after its passage will be challenged in the Supreme Court once again.

I sincerely hope the Supreme Court does not strike down the law and become the torchbearer of digital black money in India.

Finally, credit should be given to an accused in Karnataka namely “Sriki” who was arrested on a charge of drug trafficking with the use of Bitcoins, went on reeling the names of  politicians of all parties and started stating that he had given a share to X, Y Z etc. They were not verifiable either as true or false. It was Sriki’s word against that of the politicians. The pressure ultimately reached the Chief Minister of Karnataka and could have cost BJP the Chief Minister. Even if an enquiry had been instituted and the CM resigned pending enquiry, it would have dented the image of  BJP . This finally woke up Mr Modi to shed his Manmohan like procrastination and make progress on the listing of the Bill in the next session.

I am sure that the corruption syndicate will not give up their fight and will now change their goal post asking for a new “Standing Committee” or JPC so that the passing of the bill can be postponed further.

Will Mr Modi and his Government walk the talk… and get the bill passed?.

Let us keep our fingers crossed and pray that wisdom dawns on the Government and gives it enough courage to take the “Banning of Crypto Currencies Bill” to its logical end.

I will rejoice only when the war is won and the surrender agreement is signed.

But for those who are pointing out that Bitcoin has been recognized by many other countries, I would like to point out that if Mr Modi takes the lead, he will become a hero in convincing the entire global community to ban Crypto currencies which are a serious threat to the legit currencies of the sovereign countries. This will provide economic leadership status to India and has to be pursued vigorously.

(PS: My apologies to many of my friends who have already invested in Bitcoins)

Naavi

Earlier articles: 

RBI has released the copy of the Working group report on Digital Lending for public comments.

The report is available here

Comments may be sent through email before December 31, 2021 to : digitallendingwg@rbi.org.in 

The committee was chaired by Mr Jayant Kumar Dash and comprised of M/s Ajay Kumar Choudhary, P Vasudevan, Vikram Mehta, Rahul Sasi and Manoranjan Mishra as members.

The gist of the recommendations are as follows:

The following are a gist of the key recommendations:

1. Subjecting the Digital Lending Apps to a verification process by a nodal agency to be setup in consultation with stakeholders.
2. Setting up of a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem.
3. A separate legislation to prevent illegal digital lending activities.
4. Development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.
5. Disbursement of loans directly into the bank accounts of borrowers; disbursement and servicing of loans only through bank accounts of the digital lenders.
6. Data collection with prior and explicit consent of borrowers with verifiable audit trails.
7. All data to be stored in servers located in India.
8. Algorithmic features used in digital lending to be documented to ensure necessary transparency.
9. Each digital lender to provide a key fact statement in a standardised format including the Annual Percentage Rate.
10. Use of unsolicited commercial communications for digital loans to be governed by a Code of Conduct to be put in place by the proposed SRO.
11. Maintenance of a ‘negative list’ of Lending Service Providers by the proposed SRO.

12. Standardised code of conduct for recovery to be framed by the proposed SRO in consultation with RBI.

Naavi

An interesting phase in the history of data protection law in India has started with the presentation of the new version of PDPB2021 by the JPC to the Speaker. It will become public once the bill is formally presented. Until then we need to work on the comments  appearing in the press.

Some of the reports appearing in the press are here

1.JPC retains exemption clasue, adopts personal data bill: thehindu.com

2.Data Protection Bill: Panel calls for strict rules for firms, leeways for Government

3. Explained: The Joint Parliamentary Committee’s suggestion on Data Protection Bill

The report suggests that one of the members namely Mr Manish Tiwari has dissented the bill in its entirety and said that it is “Ultra vires the fundamental right to privacy as laid down by the 9 judge bench of the Supreme Court of India in Puttaswamy (2017) judgement”.

The TMC members Derek O’Brien and Mahua Moitra  have said that the Bill does not provide adequate safeguards to protect the  right to privacy and gives an overboard exemption to the Government under Clause 35″.

Another Congress member Mr Gaurav Gogoi said that the bill pays little attention to “harms arising from surveillance”

According to one of the reports,

1. The proposed change  to delete the turn over based penalty structure appears to have been dropped.
2. The data breach notification  would be required both for Personal and Non Personal data within 72 hours
3. Companies need to ensure fairness of algorithm or method used for processing personal data
4. The DPO needs to be from senior management
5. Companies will need to mandatorily disclose to data principals if their information is passed to third party.
6. If the Government agency has to pass on the information for the purposes of state use, there is no need for mandatory disclosure
7. Government departments to carry out in-house inquiry to fix blame in case of breach instead of head of department being responsible
8. Government should quality penalties for companies violating provisions of law.
9. The law will be implemented in a phased manner over a period of 2 years.

It appears that the recommendation that Social media companies should mandatorily verify users to keep their status as intermediaries (Ed: i.e. to claim exemption from liability from Section 79 of ITA 2000), will be retained.

The JPC appears to have also indicated that copies of sensitive and critical personal data that has already been  with foreign entities and stored abroad has to be brought into India in a time bound manner.

The copy of the report and the dissent statements are already with select media houses. They are likely to be in public space after 29th November 2021 when the Bill will be formally tabled in the Parliament.

We look forward to the copy of the bill to understand the changes.

The big relief is that an important step towards the passing of the  Act has been taken. From the dissent  notes it is clear that once the bill is passed, there will be a challenge mounted in the Supreme Court and the battle will go on.

Naavi

Reference

Congress MP Jairam Ramesh submits dissent note-Indian Express

Congress MPs file Dissent notes over JPC Report-Wire.com

As per the reports in press, the JPC has finalized the next draft of the PDPB in a meeting today. The draft would be submitted to the speaker of Loksabha and would be presented to the Parliament during the next session.

It is also reported that Mr Jairam Ramesh of Congress has submitted a dissenting note basically on Section 35 which is about the powers of the Government to exempt some of the provisions of the Act to Government agencies.

The exact nature of changes that have been made would be available only after the draft becomes public. Until then there is no need to speculate.

However, it appears that the possibility of the bill being passed in the current session itself is very high.

Naavi

Day 1 : Bated Breath

Day 2: Zooming in

Day3:Winding Down

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