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PayU is a significant player in the online payment settlement system in India. It was one of the earliest payment gateways and took over significant market share from CCAVENUE. However, of late some thing has happened to this Company.  It is not responding to customer queries the way a payment gateway should do.

Last time when I observed a similar development in an online web service company, it was NEt4India and eventually it went  bankrupt sinking the money of lakhs of its customers.

The regulators of India namely CERT IN and RBI could not identify the problem of Net4India and the National Company Law Tribunal did not understand the business of Net4India and allowed it to be liquidated without valuing its digital assets of over Rs 100 crores. (check for articles on this topic on naavi.org)

Now I am afraid that similar  problem may be in the making  in PayU.

I am giving below a series of twitter messages exchanged with PayUCare regarding a complaint of payments withheld by the company. It could be for renewal of KYC in the beginning but if it was only that simple, it should have been resolved by now.

Unfortunately the correspondence indicates that there is no follow up on the complaint and the internal systems must have failed and one department is not able to communicate to other.

There is also no other communication channel between the customer and the company where responses may be expected.

It is clear that the Twitter complaints are being responded to by a bot which is supposed to be driven by AI but it is an AI with no intelligence.

In this context it is only Twitter PayUCare which is atleast returning some acknowledgements. Otherwise there is no e-mail or phone on which the company can be contacted.  There is a so called “relationship manager” on e-mail who simply forwards the mail to his “team”.

A typical response from the relationship manager is captured below.

I leave it to the technology specialists to defend these types of Bots which are more an irritant and instruments of diversion of customer complaints than instruments of resolution of grievances. I am not sure if  even the e-mail is bot generated.

But, I want to highlight the failure of CERT-IN and RBI in maintaining a trustworthy regulatory framework for payments.

Under ITA 2000/8 it is mandatory for PayU to have a grievance redressal system and publish the name of the  grievance redressal officer along with his contact details.

This is a requirement under section 79 of ITA 2000. We expect CERT IN to raise this issue with Pay U. (My complaint  with CERT IN has already been made).

Further Reserve Bank of India also has a responsibility to ensure that all these Fintech Intermediaries follow certain basic principles of customer care including providing a proper contact point.

Normally these disputes are supposed to be resolved privately but I am placing this for open debate  because the company has not left any option to contact them, escalate the grievance to a higher level. Even the regulators are not alert to their responsibilities and I am sure that RBI is considering more licenses to PayU for expanding its footprint in the Indian FINTECH industry.

Let me see if this post opens the eyes of the company and the regulators. I hope my speculation that like Net4India, PayU is on a path to withdraw from Indian business does not turn out to be true.

Naavi

At last, on16th August 2022, the pending payment was received.

Naavi

Naavi.org has published scores of articles since 2013, explaining every negative aspect of Bitcoin and Crypto currencies and why it has to be banned. We have requested, urged, nudged and criticised every body in the Government including late Arun Jaitely, Nirmala Sitharaman, Amit Shah, Narendra Modi etc, besides the bureaucrats and even the Supreme Court for having not taken steps to ban Crypto currencies in the country. We have even chided and teased media including Arnab Goswami for ignoring this issue.

The lowest point in this battle was when the Supreme Court came up with what was termed as a “Strange” or “Fraudulent” judgement supporting Crypto  and striking down an RBI circular.

Finally we had resigned to the fate that “Corruption” has won over even Narendra Modi. It even appeared that the Ministry of Finance and Ministry of IT are coming together to promote Bitcoin when the JPC on Personal Data Protection Bill came up with a recommendation from no where that SWIFT should be replaced by Ripple .

Check out for different articles on Bitcoin in this site in this link

https://www.naavi.org/wp/?s=bitcoin

https://www.naavi.org/wp/?s=crypto

Just when everything appeared lost, Enforcement Directorate has come to the rescue of the country and suddenly there appears to be a realization in the Government of Modi and Nirmala Sitharaman that Crypto Currency is the “Currency of Criminals” and an instrument of money laundering.

Even Mr Arnab Goswami has taken note of the “Money laundering” in WazirX and has taken interest in speaking about the “Crypto Scam”.

Thanks to Enforcement Directorate which is investigating the Rs 1000 crore money laundering in the Chinese loan app fraud, now the media (at least Republic) has started saying “Crypto is a Scam”.

Now it will be increasingly difficult for Nirmala Sitharaman to continue her support to Crypto and find excuses.

Crypto Currencies are an epitome of all that is evil in the Digital World. It is the sustaining force for the “Dark Web”, the Cyber Crime funding and terror funding. It is the currency which all corrupt politicians have thrived on to accumulate their black wealth.

The FaceBook (Meta) with its crypto currency “Libra” and the emerging NFTs pose further challenges to the financial markets and we cannot still be confident that the Government will come up with a complete ban on Crypto currencies which is the need of the hour.

It appears that Arnab Goswami has become the last frontier to cross for Crypto Currencies which has even tamed Narendra Modi.

We need to keep our fingers crossed whether ED and Arnab together will succeed where Modi has failed and be able to defeat the Crypto Currencies or will be over powered by the power of global corruption and crime.

Naavi

In a significant move that has indirect relation to a discussion on “Privacy”, Government of India (Central Board of Indirect Taxes and Customs-CBIC), on 8th August 2022, Ministry of Finance notification no: GSR 621(E), has notified “Passenger’s Name Record Information Regulations 2022”

The salient points of the Regulations are as under:

• The Regulations require the operator of Aircrafts (i.e airlines) to transmit specified information electronically to the designated Customs System. Passengers are not required to individually submit any information to Customs, neither do they need to furnish any additional information to the Airlines on account of these regulations. Airlines are already collecting this information under the aegis of the Chicago Convention on International Civil Aviation.
• The data exchange between the Airlines and the Customs Systems is through the PNRGOV EDIFACT message format. This is a standard electronic message format endorsed jointly by the World Customs Organisation (WCO), International Civil Aviation Organisation (ICAO) and the International Air Transport Association (IATA) and is widely used internationally.
• Although some data elements included in the Regulations are available from other sources, the objective of these regulations is to obtain this data in advance of departure or arrival of the passengers for analytics by the Customs Risk Management System.
• The information collected is subject to strict information privacy and data protection and there are adequate legal and administrative safeguards built in. Processing of the information to reveal ethnicity, race, religious or philosophical beliefs, health etc. is strictly prohibited. Hardware and software necessary for data protection has already been envisaged. The information received is used for further processing only by a senior officer of the rank of Principal Additional Director General/Additional Director General.
• In normal course, the data collected is stored only for five years after which it is disposed of by depersonalisation or anonymisation. The Regulations provide for an extensive and independent system audit and security audit to prevent misuse of the information.

These regulations are meant to enhance detection, interdiction and investigative capabilities of Customs Authorities using non-intrusive techniques for combating offences related to smuggling of contraband such as narcotics, psychotropic substances, gold, arms & ammunition etc. that directly impact national security. This mechanism is being widely used by border management agencies of approximately 60 different countries.

This should help prevent the flight of criminals both of financial crimes and terror acts and hence is part of the National Security obligations.

In the context of the NPDAI the New Data Protection Act, this reflects an exception to be recognized under the National Security obligations. In our draft being built in the series of articles under the series “Shape of Things to Come-NPDAI x” we have provided the “National Security” as a duty of the Government under the Preamble and this notification goes with it.

Naavi

(Continued from the previous article)

P.S: This series of articles is an attempt to place some issues before the Government of India which promises to bring a new Data Protection Law that is futuristic, comprehensive and Perfect. 

In our previous article we discussed the desired scope of the proposed act in the form of the Preamble. The Preamble recognized the need for the law to recognize all the stake holders including the commercial business, Government, besides the individuals whose “Right to Privacy” need to be protected.

Let us now continue the discussions on fixing the ” Regulatory Structure” of the Act.

The JPC on PDPB 2019 effectively muddied the process of creation of the law by trying to merge “Protection of Non Personal Data” into the data protection law. This reflected the failure of the JPC to understand the technology of “Anonymisation” which was meant to segregate “Personal Data” from “Non Personal Data” so that different laws could address the two segments of data.

Going forward, the Government could complicate matters further by merging the exercise of updating of Information Technology Act 2000 (ITA 2000)  with the passage of the NDPAI. Further there are statements that Telecom Regulation and Non Personal Data Governance may also be combined into this same legislation.

While it is the prerogative of the Government to create a complex mesh of law that could actually render it in-effective , we shall try to identify different components of these laws as different Chapters so that some effort can be made to look at each law differently.

Currently ITA 2000 addresses both personal and non personal data in the following aspects:

a) “Legal Recognition” of electronic documents and authentication,

b) A support system for Digital Signature management

c) Legal System for addressing Contraventions leading to Civil Liabilities

d) Defining Cyber Crimes

e) Defining Cyber Security framework along with the role of CERT-IN and MeitY as the de-facto regulators

The Non Personal Data Governance regulation suggested by Kris Gopalakrishna Committee addressed the following aspects.

a) Adopting the definition of Non Personal Data as “Data” which is not personal under the PDPB 2019

b) Defining Data Business related to the processing of Non Personal Data and roles of different types of types of Non Personal Data generators and processors

b) Creating a structure for monetization of Non Personal Data and their trading

c) Creating a regulatory mechanism for governing the Act

In the process, the PDPB 2019 focussed on the following aspects.

a) Defining Personal Data

b) Prescribing norms for processing of Personal Data

c) Recognizing sub rights related to personal data processing for protection of the constitutional Right to Privacy.

d) Defining compliance measures required by the industry

e) Prescribing deterrent penalties

f) Creating a regulatory mechanism for governing the Act

Now if all these are to be combined into the same Act, we need to ensure that there is clarity for avoiding overlapping of regulations.

One of the main reasons for JPC to think of combining Non Personal Data and Personal Data into one regulation was that they did not want two centres of power in the form of two regulators. However, the role of PDPB was “Protection” while role of “Non Personal Data Governance Act” was “Commercialization of Data Business”. The two regulations required regulators with different mind sets and it was logical to have two different persons responsible for the same.

Just as in a company, the Chief Financial Officer, the Chief Marketing Officer, Chief Technology Officer has different mental attitudes and they contribute towards a balanced development of the company one with a cautious attitude, another with an aggressive attitude and yet another with an innovative outlook, the regulators of ITA 2000, PDPB 2019 and the Non Personal Data Governance need to combine together but maintain different outlooks.

If we try to bring these three different mindsets together into one regulator, then he is likely to skew towards one or the other responsibilities depending on his background and bringing harmony will be tough.

One alternative approach would be to create three sub regulators and a super regulator which if handled professionally could work.

We therefore suggest the Regulatory Framework as follows:

1. Regulator for Personal Data Governance (R-PDG)
2. Regulator for Non Personal Data Governance (R-NPDG)
3. Protection of Personal and Non Personal Data  (R-Protection)

In this model, the regulator for Personal and Non Personal data (R-Protection) would be a “Security Expert” and would not only address setting standards of Cyber Security for Non Personal Data but also the requirements of Security of Personal Data (as envisaged under Section 24 of PDPB 2019). CERT-IN can be provided this role and he can work under the Super Regulator.

The Regulator for Non Personal Data Governance is a marketing function and he would be responsible for the monetization of data which inter-alia will include the responsibility for defining the standard of anonymisation that segregates personal and Non personal data. He will be like the SEBI and regulate the “Data Exchange” and will work under the overall supervision of the Super Regulator.

This leaves the Regulator of the Personal Data which is the current function of the Data Protection Authority of India under PDPB 2019. In the new model, the primary role of this regulator would be ensuring that the “Principles of Processing of Personal Data and the Rights of Data Principles” are monitored in such a way that the “Right to Privacy” is protected in the information world. He will also work under the Super Regulator.

Currently there are some quasi judicial responsibilities which are entrusted to the “Adjudicators” both under ITA 2000 and PDPB 2019 as well as CERT IN outside the more formal judicial system of “Tribunals” which integrate with the High Court/Supreme Court system.

In the new model, it is recommended that a fourth regulatory position is created under the Super Regulator to focus on the “Adjudication ” alone. The adjudicator would adjudicate both on contraventions presently under the PDPB 2019 as well as under ITA 2000 and the emerging conflicts under the Non personal data governance. These will be set up in multiple cities and appeals go to a Tribunal with benches in different parts of the country and finally appeals landing with the High Court and thereafter the Supreme Court. The criminal justice system is left untouched and hence the  regulatory authority for criminal offences would continue to be the “Police”, the legacy judicial system.

The Super Regulator would be like the CEO in a commercial organization and would be assisted by a group of experts like a Board of Directors. This structure would replace the current system of Data Protection Authority of India with a Chairman and Six Members.

The Super Regulator would be multi member body like the CVC or CEC and supported by a Super Governance Board with appropriate checks and balances. The Super Governance Board may have even broader representation than the current Six member Data Protection Authority of India.

The structure may appear as follows.

Though the regulatory structure looks too elaborate, it would be essential for the type of complex legislation presently planned.

Next article

Naavi

[This is a continuation of the previous article in the series]

P.S: We are aware that the suggestions made in this series of articles could be completely ignored by the Government which says that it already has a draft in an advanced stage. Nevertheless, let us go through suggesting a version from our side so that Government can save time in completing its exercise. It could at least be helpful in finetuning the version of the Government.

We are also aware that Privacy law is a very complex law and it is not possible to satisfy all stake holders fully. It is for this reason that the framing of this law has remained pending for over a decade. 

The suggestions made here in are work in progress and may be modified and corrected with inputs from others. 

The stakeholders for this law are

1. Individuals whose Right to Privacy has to be protected 
2. Business Entities who process data for commercial purpose
3. Government agencies
4. Non Commercial organizations

The preamble of the Act has to capture the identity of the stake holders and the objectives of the law.

PDPB 2019 recognized the need to protect Privacy and fostering growth of digital economy. It also recorded the objectives as “Protection of digital Privacy” of individuals, facilitation of the “flow and usage of data”, protecting rights of individuals, laying down norms for social media platforms, cross border transfer, accountability of entities, remedies for unauthorised and harmful processing as well as to ensure the interest and security of the State, establish a data protection authority etc.

The Preamble needs to be reworded to properly capture the objectives of the Act without limiting the scope of the Act.

One suggested draft is as follows:

Where As, the Right to Privacy of an individual is a fundamental right of an Individual in the society, and it is the duty of the Government to protect the Right to Privacy in accordance with established international norms of countries respecting human rights,

Where As it is also the duty of the Government to effectively Govern the society  and  ensure Security of State, Security of individuals in the country, Maintain law and order as well as  harmony in the society, 

Where As for protecting the Right to Privacy  of an individual, it is necessary to protect personal data from unauthorized use causing harm to individuals,

Where As for protecting personal data of Individuals, an appropriate Data Governance mechanism is required to be established for ensuring that data is processed  in accordance with the need to protect the right to privacy of an individual without adversely affecting the the legitimate needs of Business and the Government or any other members of the society.

Be it enacted by Parliament ……

Next article

Naavi

With the withdrawal of the PDPB 2019, some parts of the industry feel relieved, some are feeling Déjà vu. Some feel that the dreaded law will never come back.

It is no doubt a disappointment and loss of momentum for those who were looking ahead to India being in the global community of nations, more than 130 of which have data protection laws in one form or the other. The EU personal data vendors will now look down on India as a lost hub for data processing and prefer to move over to Phillipines or other countries where cost efficiencies and other advantages compete with India.

While we hope that the Government may come up with an alternate draft soon, the professionals in the industry should note that there is no vacuum as far as the data protection law is concerned in India.

The PDPB 2019 was expected to repeal Section 43A of ITA 2000 which was directly comparable to PDPB 2019. Now that PDPB 2019 is no longer there, Section 43A will be more relevant as the “Data Protection Law of India”.

Additionally we need to note that Courts are continuing to recognize principles of Data Protection as was envisaged in the PDPB 2019 or those referred to in the international regulations like the GDPR and pronouncing judicial orders related to “Right to Forget” and other privacy principles which have been discussed in the body of the Puttaswamy judgement though they were not part of the final judgement in the Puttaswamy case.

For example, a recent ruling in the Karnataka High Court (WP12596/2022) an order has been issued to provide interim protection related to a “Right to Forget” application by a few respondents who were earlier acquitted in a certain case.  We have seen similar orders earlier from high courts of Odisha, Madras and Delhi.  These orders mean that judiciary already recognizes the provisions of PDPB 2019 and other data protection laws as operative under the Puttaswamy judgement. More appropriately these are considered “Due Diligence” and part of the “Reasonable Security Practice” under Section 43A and Section 79 of ITA 2000 as amended in 2008 with notification of  rules in April 2011.

Hence Section 43A of ITA 2000 qualifies to be called the current Data Protection law of India.

The enforcement agency under ITA 2000 are

a) CERT IN in respect of Data Breach Notifications and contravention of Section 70B

b) Adjudicator in respect of claim of any damages by any person for contravention of any of the provisions of the Act

c) Police for prosecution of any criminal offences under Chapter XI of the ITA 2000

Obviously, these regulatory agencies are not as powerful as the envisaged data protection authority of India (DPAI) under PDPB 2019 nor has the focus on Privacy and Data Protection like what the DPAI was expected to do.

Generally the penal provisions under ITA 2000 and invoking the power of the Adjudicator under Section 43A is accepted only when a victim who has suffered a damage approaches the authority.

However, the rules of 2003 on Adjudication provides powers to the Adjudicator for “Suo Moto” action.  Hence when there is a need any of the Adjudicators (One in each state) can take action against any person who caused damage to any other person even if the victim has not approached the Adjudicator (IT Secretary of the State or UT).

The Adjudicator can impose fines and either make payment to the identified victims or hold it in trust for them and ask them to make the claim. He can also invoke criminal investigation as may be necessary.

Similarly, the CERT IN is the agency to which any data breach has to be reported within 6 hours. CERT IN also can invoke adjudication or prosecution as it may deem fit.

Thus Between the three law enforcement agencies namely, the CERT IN, Adjudicator and the Police, both civil and criminal proceedings can be initiated under ITA 2000 for any contravention of Section 43A and/or other sections.

Organizations can thank themselves that the Adjudicators and CERT IN Director General at present have not shown any inclination for suo moto action. But the law does not bar them from realizing their powers and a sense of duty that may prompt them to take action as would a DPAI would take. In the event of non compliance not leading to a data breach, authorities may not impose a penalty but a disciplinary fine may still be a possibility.

Having therefore taking note of the presence of a “Trinity of Regulators” for Data Protection in India,  we can now focus on the details of Section 43A compliance. While looking at Section 43A compliance we may note that 43A is just one section that can be invoked under ITA 2000 when there is any contravention of law related to “Sensitive personal information”. This does not mean that the law does not address “Non Sensitive personal information” or “Non Personal Information”. ITA 2000 addresses both Personal and Non Personal Information and both Sensitive personal information and Non Sensitive personal information.

Non sensitive personal information is covered under Section 72A as a criminal offence as well as Section 43 as a Civil wrong. When Section 43 is invoked,, Section 66 also becomes relevant and can impose 3 years of imprisonment to a person who causes a data related loss. The criminal offences extend to individuals through the operation of Section 85.

Additionally Section 67C speaks of data retention, Section 69,69A,69B are related to disclosures.

If we look at the India Information Security Framework created by Naavi, the following risks are identified in non compliance of ITA 2000.

The corresponding compliance framework IISF shown below describes the compliance requirements in general.

The above compliance requirements are already integrated to the DPCSI (Data Protection Compliance Standard of India” and the DTS mechanism developed by Naavi/FDPPI.

If we carefully observe the Risk areas mentioned above, ITA 2000 goes much beyond Section 43A in imposing data protection without distinguishing between whether they are personal or non personal.

While Section 43A is restricted to Body Corporates (Which includes all non Government bodies) and imposes pre-emptive compliance measures in respect of Sensitive personal data as defined in ITA 2000, Section 43 applies where ever the value of data residing inside a computer resource is diminished. This is a pretty broad definition and covers all aspects of “Harm” that the data protection bill envisaged.

As regards compliance of Section 43A, even organizations other than Naavi, such as DSCI have come up with their own frameworks for compliance. Naavi has expanded it into a comprehensive  IISF framework and also integrated the PDPB provisions as “Due diligence” elements in the DTS assessment.

In the recent days, CERT IN has shown a tendency to start invoking its powers to some extent and if they so desire, they can be more stringent than the DPAI under PDPB 2019.

In view of the above, organizations need to avoid complacency and continue their efforts on Data Protection.

Naavi