Data Fiduciary and Data Processor Obligations Under DPDPA, 2023

Data Fiduciary and Data Processor Obligations Under DPDPA, 2023

In the evolving landscape of data protection in India, the Digital Personal Data Protection Act, 2023 (DPDPA) introduces comprehensive obligations for Data Fiduciaries and Data Processors. As businesses increasingly handle vast amounts of personal data, understanding and complying with these responsibilities is critical to avoid legal penalties, maintain trust, and ensure smooth operations.

At AMLEGALS, we provide expert legal advisory services to help organizations meet their obligations under DPDPA, ensuring full compliance and minimizing risk.

What Are Data Fiduciaries and Data Processors?

Under the DPDPA, 2023, the terms Data Fiduciary and Data Processor have specific meanings:

• Data Fiduciary: A Data Fiduciary is any person or entity that determines the purpose and means of processing personal data. This typically includes businesses, corporations, government bodies, and organizations that collect and control personal data.
• Data Processor: A Data Processor is any person or entity that processes personal data on behalf of a Data Fiduciary. This generally refers to third-party vendors or service providers who handle data based on the instructions of the Data Fiduciary.

The roles of both Data Fiduciaries and Data Processors are critical under the DPDPA, with specific obligations outlined to protect personal data and ensure transparency in its use.

Obligations of Data Fiduciaries Under DPDPA, 2023

Data Fiduciaries are primarily responsible for the collection and management of personal data. The following are key obligations imposed on them under the DPDPA:

1. Obtaining Valid Consent

Data Fiduciaries are required to obtain clear, informed, and specific consent from data principals (the individuals whose data is being processed) before collecting or processing their personal data. This consent must be:

• Freely given
• Specific to the purpose of processing
• Accompanied by full disclosure of the rights of the data principal

Failure to obtain valid consent can result in penalties under the DPDPA, making it essential for businesses to review their consent mechanisms.

2. Compliance with Purpose Limitation

Personal data collected by a Data Fiduciary must only be used for the specific purpose for which it was collected. Any processing that goes beyond this purpose requires obtaining fresh consent from the data principal.

Best Practice: Ensure that internal data governance policies include clear guidelines on the purpose limitation principle to avoid non-compliance.

3. Transparency in Processing

Data Fiduciaries are obligated to provide clear information to data principals regarding:

• The purpose of data collection
• Categories of personal data being collected
• Rights of data principals
• The manner in which their data will be processed

Ensuring transparency is a critical compliance requirement that builds trust and minimizes the risk of disputes.

4. Ensuring Data Security

Data Fiduciaries must adopt reasonable security safeguards to protect personal data from unauthorized access, disclosure, or misuse. This includes technical measures like encryption and organizational measures such as data protection policies and employee training.

AMLEGALS’ Insight: Implementing a robust data security policy not only aids compliance but also mitigates the risk of data breaches and related penalties.

5. Breach Notification

In the event of a data breach, Data Fiduciaries are required to notify the Data Protection Board and the affected data principals without undue delay. The notification must include:

• Details of the nature of the breach
• Likely consequences of the breach
• Steps being taken to mitigate the effects of the breach

Timely breach notification is crucial to managing reputational damage and reducing legal liability.

6. Data Retention and Deletion

Data Fiduciaries must not retain personal data beyond the period necessary for fulfilling the purpose for which it was collected. They are required to establish data retention policies and ensure timely deletion of personal data once the purpose is met or when consent is withdrawn.

Obligations of Data Processors Under DPDPA, 2023

Data Processors are equally important in ensuring compliance under DPDPA, though their responsibilities differ from those of Data Fiduciaries. Some key obligations include:

1. Processing Data Only on Instructions

Data Processors are legally bound to process personal data strictly according to the instructions provided by the Data Fiduciary. Any deviation from these instructions, including using data for unintended purposes, is a violation of the DPDPA.

Key Consideration: Ensure that all processing agreements with Data Fiduciaries clearly define the scope of processing activities.

2. Security Safeguards

Similar to Data Fiduciaries, Data Processors must also adopt adequate security measures to protect personal data. This includes both technical measures like encryption and organizational policies to prevent unauthorized access, misuse, or leaks of data.

AMLEGALS’ Insight: Regular audits of your security infrastructure can help identify vulnerabilities and ensure compliance with the security obligations under the DPDPA.

3. No Retention Without Instructions

Data Processors are prohibited from retaining personal data for longer than instructed by the Data Fiduciary. They must delete or return the data as soon as the purpose of processing is fulfilled or when instructed to do so by the Data Fiduciary.

4. Cooperating with Data Fiduciaries

Data Processors are required to assist Data Fiduciaries in fulfilling their obligations, including:

• Providing access to information necessary for compliance audits
• Assisting with the handling of data subject requests (e.g., requests for deletion or rectification)
• Cooperating in the event of a data breach to mitigate its impact and manage notifications

Legal Implications of Non-Compliance

The DPDPA has established strict penalties for non-compliance, with heavy fines for both Data Fiduciaries and Data Processors who fail to adhere to the obligations. The potential consequences include:

• Fines up to ₹250 crores for severe violations
• Significant reputational damage due to data breaches or non-compliance
• Loss of business due to lack of trust in data handling practices

Compliance is not optional—it’s critical for the long-term success of your business. At AMLEGALS, we offer legal advisory services that ensure your business is compliant with the DPDPA and prepared to handle the complex obligations of both Data Fiduciaries and Data Processors.

How AMLEGALS Can Help?

AMLEGALS is a leading law firm with expertise in data protection laws, particularly the Digital Personal Data Protection Act, 2023. We provide tailored legal services for both Data Fiduciaries and Data Processors, helping businesses navigate the complexities of the DPDPA. Our services include:

• DPDPA compliance audits
• Drafting of consent and privacy policies
• Reviewing data processing agreements
• Advisory on data breach management
• Training programs for in-house teams on data protection obligations
• Representation before Data Protection Boards and authorities

Conclusion

Compliance with the DPDPA, 2023 is a legal necessity for both Data Fiduciaries and Data Processors in India. AMLEGALS offers comprehensive legal support to help businesses meet their obligations and avoid the risk of penalties and reputational harm. Get in touch with our experts on how we can assist you in ensuring full compliance under the DPDPA on dataprivacy@amlegals.com.