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I have earlier discussed in these columns matters related to my following RTI application in which I had queried both the RBI and the Ministry of Finance that Trans Union International Inc, an US based Company increased its share holding in Credit Information Bureau (India) Limited or CIBIL, from 10% in around 2009 to 92.1 % in 2017. In the process it acquired shares earlier held by public sector banks.

This foreign private company is now holding sensitive critical information about Indian borrowers. We donot know if this company is holding its data in India or abroad and violating the “Data Localization Norms”.

The Company CIBIL came into existence as a result of the recommendations of the N H Siddiqui committee way back in 1999. This working group submitted its report in October 1999. It had recommended interalia that

 (a) a Credit Information Bureau be set up under the Companies Act, 1956 with equity participation from commercial banks, FIs and NBFCs registered with Reserve Bank of India;

(b) a foreign technology partner be included as a collaborator in setting up of a Bureau;

(c) an appropriate legal framework be put in place to provide adequate protection to the Bureau as also the credit institutions sharing information with the Bureau;

(d) pending enactment of a master legislation/legal amendments, a beginning could be made for setting up a Bureau which can operate initially by pooling information on suit-filed accounts as also transactions on which the borrower has given consent, for sharing amongst the user group.

In the Monetary and Credit Policy for the year 2000-2001, the Governor, Reserve Bank of India, announced the setting up of Credit Information Bureau in India.

Credit Information Bureau (India) Ltd., (CIBIL) was set up by State Bank of India in association with HDFC in January 2001, with an authorised capital of Rs.50 crore and a paid up capital of Rs.25 crore, with equity participation of 40 per cent each and two foreign technology partners viz., M/s. Dun & Bradstreet Information Services (India) Pvt. Ltd., and Trans Union International Inc., U.S.A. sharing the remaining 20 per cent equity stake.

With a view to strengthening the legal mechanism and facilitating the Bureau to collect, process and share credit information on the borrowers of banks and financial institutions, a draft legislation covering, inter alia, responsibilities of the Bureau, rights and obligations of the member credit institutions and safeguarding privacy rights, was prepared by Reserve Bank of India and submitted for Government’s approval in May 2001.

A Copy of this report is available here

This report examined the legal issues and recommended  that under the (then) existing legal framework, CIBIL or any other CIB may collect, process and disseminate credit information relating to;

1. 1. suit-filed accounts regardless of amount claimed in the suit or amount of credit granted by a banking company or a credit institution; and
   2. such transactions where the constituent has given consent for disclosure for such purpose.

A Code of conduct was also prescribed for CIBIL pending a detailed legislation.

The entire discussion at this stage was under the presumption that CIBIL was an institution owned 80% by SBI and HDFC and had accommodated foreign companies only for their technical expertise. This must be considered the “Constitutional Basis” for CIBIL.

Subsequently, in 2005 the Credit Information Companies (Regulation) Act (CICRA) was enacted and apart from CIBIL , three other Creidt Information Companies (CICs) were also set up.

Subsequently in January 2014, the Aditya Puri Committee of RBI gave its report to recommend data format for furnishing of credit information to credit information companies.

Copy of this report is available here

According to the Act, a Credit Information Company was one which had been granted a certificate of registration by RBI. The condition of registration was to be set by RBI taking into account the public interest.

It is interesting to note that the Act itself prescribed Information Privacy Principles under Chapter VI which required “Consent” as well as maintenance of “Accuracy” and “Security” of Credit information.

It said

“A credit information company or credit institution or specified user, as the case may be, in possession or control of credit information, shall take such steps (including security safeguards) as may be prescribed, to ensure that the data relating to the credit information maintained by them is accurate, complete, duly protected against any loss or unauthorised access or use or unauthorised disclosure thereof.”

It also said

“Every credit information company, credit institution and specified user, shall adopt the following privacy principles in relation to collection, processing, collating, recording, preservation, secrecy, sharing and usage of credit information, namely:—

(a) the principles—

(i) which may be followed by every credit institution for collection of information from its borrowers and clients and by every credit information company, for collection of information from its member credit institutions or credit information companies, for processing, recording, protecting the data relating to credit information furnished by, or obtained from, their member credit institutions or credit information companies, as the case may be, and sharing of such data with specified users;
(ii) which may be adopted by every specified user for processing, recording, preserving and protecting the data relating to credit information furnished, or received, as the case may be, by it;
(iii) which may be adopted by every credit information company for allowing access to records containing credit information of borrowers and clients and alteration of such records in case of need to do so;

(b) the purpose for which the credit information may be used, restriction on such use and disclosure thereof;
(c) the extent of obligation to check accuracy of credit information before furnishing of such information to credit information companies or credit institutions or specified users, as the case may be;
(d) preservation of credit information maintained by every credit information company, credit institution, and specified user as the case may be (including the period for which such information may be maintained, manner of deletion of such information and maintenance of records of credit information);
(e) networking of credit information companies, credit institutions and specified users through electronic mode;
(f) any other principles and procedures relating to credit information

Since the Act envisaged that a CIC was a company under the Indian Companies Act, other requirements of share holding of such a company and FDI should come under the general norms of allowing Foreign Direct Investments.

It was in 2016 when TransUnion was allowed to take over 82% of the stake in CIBIL to become Trans Union CIBIL. At this time, the Modi Government was in place and Mr Arun Jaitely was the Finance Minister. It is therefore under this regime that CIBIL’s ownership transformed and all the Public Sector and other Banks transferred their shares to Trans Union. During this time Mr Raghuram Rajan ( A nominee of Mr P Chidambaram) was still the RBI Governor and Mr Urjit Patel took over in September 2016.

Each of these Banks are corporate entities and hence there must have been a debate on the pricing of the shares and why the shares should be or should not be sold in their respective organizations and Boards.

It is possible that the Finance Ministry must have given a direction by way of a circular or an informal instruction to the Chairmen that they should sell their shares in CIBIL to TransUnion at a given price.

RBI being the custodian of these Banks and also the licensing authority under CICRA must have been consulted if the license given to CIBIL in its earlier ownership model is extendable to the new ownership or it has any objections.

In the CICRA regulations issued by RBI, RBI made the rules for implementing the Act. The rules expanded the user base of the information to stock brokers and Mobile companies which must be considered as “Ultravires the Act”.

The regulations failed to recognize the possibility that critical data of Indian citizens could land in foreign hands if the ownership of the Company is not restricted to Indians. (It may be noted that the ITA 2000 rules on Certifying Authorities restricts the foreign ownership and hence this neeed was within the radar of the Government regulators).

The privacy principles included in this regulation is worth taking a look and being compared with the current standards of Privacy under the proposed PDPA.

There are also security guidelines to safeguard the information in the form of a separate notification.

In framing these rules,  RBI appears to have ignored the need to take a stand on the nationality of the ownership of such companies and the need to protect the value of the information from falling into the hands of foreign hands.

Further it appears that the licensing does not have a fixed term and need to review it periodically though the power to cancel the license is available.

Now RBI has issued Data Localization mandate to Banks which should also in principle should apply to CIBIL. Hence the transfer of ownership from Indian Banks to a foreign technology company is sufficient ground to cancel the license issued to CIBIL.

RBI should take suo moto action in this regard failing which I request some of my friends to take up a PIL in Supreme Court to direct the RBI to cancel the license to CIBIL unless it tranfers its share holding to Indian Banks as it was existing before 2016 or more ideally the entire share holding.

In a recent RTI application made in this regard to know how RBI allowed this “Laundering of Sensitive Personal Data of Indian Individuals” from the hands of Indian Banks to foreign hands, RBI has replied that it does not possess this information. Given the fact that the TransUnion acquisition of shares was from other Banks, it is difficult to accept the contention that RBI does not have the information. Obviously, RBI refuses to get into a controversy as it may expose an unsustainable decision of its former Governor and perhaps also expose some irregularities of the Ministry of Finance.

RBI has however hinted that the information on how the FDI was permitted could be obtained from the Foreign Investment Promotion Board (FIPB) which is the organization which has landed Mr P Chidambaram in jail today and CBI is investigating some of the cases related to the approvals.

I request CBI to also consider this FIPB clearance given to various Banks to sell their shares in CIBIL to TransUnion as part of its current investigation.

In the meantime, I am still awaiting response from the Ministry of Finance under the RTI to understand how FIPB gave this clearance. Shareholders of each of the Banks which held the shares of CIBIL and sold it off to TransUnion should also question their respective Boards to disclose why that decision was taken.

If properly investigated, this could unearth a scam of its own. I request public spirited advocates to take up a PIL in this regard in Delhi preferably at the Supreme Court and bring the details of the take over deal to the public domain.

This is important for the protection of Privacy of Indian Bank customers. I personally have no objection for Indian Banks to exchange credit data because it is in the interest of our Banking industry but there is no reason why a US based technology company should own the critical financial transaction data of Indian citizens.

Naavi

Earlier Articles

Is TransUnion-CIBIL guilty of Accessing Critical Personal Data through surreptitious means?

Is TransUnion-CIBIL guilty of Accessing Critical Personal Data through surreptitious means?

There is a debate presently going on in the Supreme Court of India about the responsibilities of the Social Media Companies such as FaceBook and Twitter in preventing “Fake Accounts” and “Fake News”.

It is beyond question that Fake news is a menace which should be stopped. It is actually in the interest of these service providers such as Facebook, Twitter and WhatsApp that they introduce a system that prevents fake news as a means of preserving the trustworthiness of their platform.

We know that due to Phishing, any e-mail or a phone call from a Bank is not trusted by the customer. Even if the call is genuinely from a Bank, today we will consider it as a fraudulent call. This situation should not come to social media also.

Some of the Social Media companies are resisting the request of the Government to take steps to prevent fake news by complaining that any attempt to identify the originating source of a message is an infringement of the privacy rights of the person accused of sending such messages.

In the past Courts have provided an excessive credibility to the Social Media by

a) Considering the forwarding of messages as an endorsement of the content

b) Clicking “Like” button or Re-Tweeting as an endorsement of the content

c) The Double Tick in Whats App as a delivery confirmation of a message and Double blue tick as an acknowledgement of receipt (Even when there is no Section 65B Certificate)

This excessive reliance by the Judiciary is itself the reason for  increasing the possibility of the socialmedia being used for planting fake stories .

Fake Message Prevention needs technical measures both at the time of creation of the account and also when an objectionable message is sent.

The Social Media should therefore be mandated to observe some general security practives such as the following:

1. At the time of opening of a social media account, the details of registrant along with the meta data such as the IP address, Device ID (eg: IMEI number, Bios ID) must be captured by the service provider and preserved until at least 3 years after the account is closed. In case of any legal dispute arising on the account, the information should be considered as “Evidence” and archived permanently.
2. At the time a message is sent which is suspected to be “False” if the law enforcement demands the origin of the message, then the social media manager needs to produce the information such as the Mobile Number or IP address, the registered address of the account holder etc.
3. Quite often the Social Media companies hold out an excuse that content is encrypted end-to end  and any request of the law enforcement requires “Decryption” which technically may be not feasible.It is difficult to believe this contention since law enforcement requests are only for the information about the originator of the message and not the message per-se. It is only after a person who has a copy of the message filing a complaint that the investigation is taken up. At this time, the content is already known and there is no need for WhatsApp to provide the content.The previous messaging device ID is not part of the encryption but is only part of the meta data. Hence there is no reason to accept the contention of these companies that they are not in a position to provide the details as asked.
4. The request for decryption may come only when there is a demand under Sec 69 of the ITA 2000 which can be invoked under very limited cases and only when national interest is involved. There are sufficient checks and balances in law to prevent misuse.If some law enforcement personnel misuse the provisions and intercept without authority, the Act considers such interception as “Unauthorized Access” under Section 66 of ITA 2000.  Hence there is no reason why these companies should be allowed to avoid cooperating with the law enforcement making a request using the due process. The data localization requirement under PDPA has actually originated because the Google and FaceBook donot cooperate with the law enforcement and provide the information required by the police. Supreme Court should not allow these companies to bully their way through and avoid responding to the genuine law enforcement requests.

Linking of Aadhaar

If prevention of creation of Fake Accounts is a necessity, then the means of ensuring this could be insisting on the “KYC” of the customer at the time of opening of social media accounts.

Face Book, Google as well as WhatsApp want to use their members to transfer money through the accounts to “Friends” and “Contacts”.

If therefore the identity of account holders is not verified properly these accounts become conduits of unaccounted transactions. 

FaceBook in particular is dangerous because they are promoting their own Crypto Currency (Libra) and will be a direct threat to the economy providing a conduit for black money legitimization.

If therefore the Government wants a good KYC using Aadhaar or PAN Card , Digital Signature Certificate etc., as the basis, it is a fair request.

Since the Supreme Court has not been in favour of private sector using the “Aadhaar” for KYC purpose, these agencies can make use of “Virtual ID” or “Offline Verification methods”.

Presently, Twitter has a “Blue Tick” facility to mark accounts which have been “Verified”. Similar verification can be introduced for other social media accounts also.

Even if  Verification  is not made mandatory if a provision is available,  a majority of Indians would opt to have the “Verification Tick” as a prestigious tag.

At the same time, those who opt out may be given a “Red Cross tick” to show they are “Unverified”.

In due course, the  “Identified” account holders will be in majority and push the “Fake Account holders” to the category of “Untrustworthy accounts”. In a way this will automatically segregate the “Blue Ticked Verified Account holders” from the “Red crossticked unverified account holders”.  This will reduce the incidene of fake news substantially without any further effort.

Since “Consent” could be a basis for many other “Sharing of Sensitive Information” as per PDPA, there is no reason why we should not allow account holders voluntarily submitting their Virtual Aadhaar IDs to get their ID verified at the time of opening of their Social Media accounts.

When the Supreme Court hears the petitions in this regard, it should therefore take into account the above suggestions and help in improving the credibility of the Social media.

Naavi

Cyber Law College, a division of Ujvala Consultants Pvt Ltd has introduced a new version of a Course on PDPA (Personal Data Protection Act).

This version would include additional modules on Data Governance Framework as well as a discussion on the Data Protection Challenges in the New Technology areas such as Artificial Intelligence, Big Data etc.

Some people are gloating over the “First Fine under GDPR in Sweden” where a school has been fined 200,000 euros for testing Face recognition technology for attendance monitoring.

This move deserves unequivocal condemnation and probably is an example of how regulators should not function. It actually appears like the Swedish DPA having scored its first victim who was a soft target just to show that it has the power.

According to one expert,

“The school cannot use consent as a basis for carrying out this processing of personal data, as the individuals in question have a dependency position as pupils in the school,”

While the legal point of ” Undue influence” is well recognized, this also extends to many other situations including employers taking consent from employees.

This decision is a landmark no doubt on how GDPR is used to harass uses of technology.

Even if the authority was unhappy that the school did not consult them with a DPIA before “Testing” the software, it would have been reasonable if the School had been warned and given a nominal fine of One Euro.

Then public would have appreciated the gesture and the intention of warning others.

It is possible that the school may be rich enough to bear the fine but the principle of treating an educational institution with a heavy fine for testing technology is unacceptable. If this becomes a precedence, every organization needs to take prior legal opinion before any operational decision on implementation of technology. Many technology implementation projects would hit a roadblock. This is not good for the future of technology.

I wish this order is over turned as excessive application of regulatory power.

Naavi

Today is 17th October, a day of special significance  to all those who use internet and computers or mobiles in India.

On this day in 2000, the Information  Technology  Act 2000 was notified.  This gave  legal recognition  to electronic  documents,  the method of signing an electronic  document  as well as a method for presenting an electronic  document  as evidence  in a Court.

All this together  ushered in the Digital  Society  of India.

I will  be celebrating the day at NALSAR Hyderabad  with  the students.

Hope  some day the MEITy will  realize  the importance  of the day and declare  it as the Digital  Society  Day of India officially.

Naavi

“Anonymization” takes personal data out of the purview of most data protection regulations. Hence it is one of the objectives of data protection compliance managers to mitigate the data protection risks by pushing part of the “Protected Data” out of the “Protection Zone” by “Anonymizing it.

In the Indian PDPA, the Data Protection Authority is eventually expected to provide an explanation of when a “Personal Data” is deemed to be “Anonymized”.

For an organization, “Data” to be Governed includes “Personal Data” as well as “Anonymized Data”. Just because a certain data element is anonymized, it may not mean that it is no longer an asset that need not be secured. In fact, many organizations may acquire “Identified Personal Data” at a cost and there after spend more to anonymize it. So, Anonymised data may be more valuable as an asset than the identified data from the “Cost of Acquistion” point of view.

However, the need to secure “personal data” because of the regulations and the possibility of a heavy financial penalty in case of failure introduces another element of “Opportunity Cost” to the identified personal data arising out of data breach and/or non compliance of data security regulations.

A Corporate Manager who is interested in “Data Governance” (Data Governance Officer or DGO) is concerned both with the “Cost of Acquisition” as well as the “Cost of non compliance”. The “Data Protection Officer” (DPO) on the other hand is interested only in the “Non Compliance Cost”.

“Anonymization” is a process that acts as a gateway between the DGO’s territory and DPO’s territory. The DGO hands over the data as “Identified Personal Data to the DPO for Compliance management. At the same time, he would have retained what is classified as “Anonymized Data”. The anonymized data may go for a separate shop floor for a process of adding value through “Data Analytics”.

If however, the “Anonymization Process” is not good enough, then the organization would be exposed to the re-identification risk. The demand for penalty in that case would come from the supervisory authority to the DPO.

DPO is therefore responsible for the “Adequacy” of the “Anonymization Process”. In fact if a company adopts “Anonymization” as a part of its Data Management policies then the “Anonymization Process” should be subjected to a DPIA (Data Protection Impact Assessment) by the DPO.

Probably these are situations when there would be a conflict between the DGO and the DPO. While the DPO may blame the DGO for imperfect anonymization, DGO may blame the DPO for “Motivated Re-identification” in a downstream process.

Let us leave this conflict to be resolved by the  proper structuring of the “Data Governance Framework” which should include the “Data Protection Framework as a subset”.

In the meantime, let us briefly look back on  Naavi’s Theory of Data and see whether this theory can recognize the journey of data from “Personal Data” status to “Anonymized Data” status.

In the theory of data, we had included a “Reversible Life Cycle Hypothesis”. This was part of the three hypotheses that made up the theory including the other two hypotheses namely the “Definition hypothesis” and “Additive value hypothesis of ownership” .

The essence of the theory was that “Data is Constructed by technology and Interpreted by Humans”, Data undergoes a lifecycle of birth to adulthood to different stages of maturity and then death, providing ownership to different persons for different value additions”.

If we try to trace the life cycle of personal data through anonymization we can identify that data goes through different phases of development in which it will assume different avatars as shown in the diagram above.

A Company may normally acquire data in the form of a limited personal data collected in a web form or when a netizen clicks on a web advertisement or visits a website. At this point of time the company may get some limited identity parameters such as the IP address of the person and possibly the name and email address he fills up on a web form. This Limited personal data later may acquire the status of an “Irrevocably identifiable personal data”  if some elements of identification such as a PAN number or a Mobile number etc is collected or become a sensitive personal data if the collected data elements include specific data elements.If processed into a profile it may become profile data.

If the company removes the identity parameters and keep it separately, it may become “Pseudonymized data”. If the identity parameters are irrevocably destroyed the data may become “Anonymized Data”. The anonymized data may be aggregated into big data.

In between all these categories, part of the limited identity personal data or identified personal data or anonymized data may be called “Community data” if it contains the data of a group of individuals.

In all the above avatars  the “Corporate Data” is a class of its own and may be further classified as IP data, Business Intelligence data, HR data, Finance Data etc.

While the “Data Protection laws” may apply to Personal data, Sensitive personal data and profile data, Cyber Crime laws such as ITA 2000 will apply to all data including personal data. In future, a Data Governance Act of India may also come to apply to “Non Personal Data”, “Aggregated Data”, “Community Data” etc.

The fact that “Data” exists in multiple forms and one can change into other and back is a point which is well captured by the “Reversible life cycle hypothesis of the Theory of Data”. The fact that different laws may apply to it at different stages is also explained by the life cycle hypothesis. The only difference between the human life cycle and the data life cycle is that data life cycle can be reversed in the sense that non personal data can become personal data and later come back to non personal data status. Humans may not be able to do so except when they are  mythological characters like …Yayati and Puru.

What the Theory of Data highlights is that any regulation which does not take into consideration that “Data” changes its nature in the ordinary course of its usage and a “Dynamic Data” requires a “Dynamic Regulation” will have problems.

In the human equivalent, we have the issue of a law applicable to juveniles being different from the law applicable to adults. similarly law applicable to unmarried may be different from law applicable to married, law applicable to men can be different from law applicable to women, law applicable to Hindus may be different from law applicable to Muslims and so on.

Just as there is strength in the argument that there should be a “Uniform” law for humans, there should also be an attempt to explore if “One comprehensive law of data” can cover both Personal Data and Non Personal Data.

In view of the important transition of applicable regulations when data crosses the border of anonymization, the management of the anonymization gateway is a critical function of Data Governance.

One debate that has already come up is whether there can be a “Standard of Anonymization”?

If so, how will it be different from de-identification standard which defines certain parameters as “Identity parameters” and if they are not present in a data set, the data set is considered de-identified or otherwise it is identified”.

The “Anonymization standard” cannot be that simple since it should be considered computationally infeasible to re-identify an anonymized data.

“Computational Infeasibility” of re-identification comes from the erasure of the “Meta Data” which needs to be irrevocably removed. We all know that if we create a word document, the details of the author is perhaps known to “Microsoft”. If therefore the document is to be anonymized, we need to check if whatever meta data is associated with the document and wherever it is stored, is permanently destroyed.

“MetaData identifier Destruction” could perhaps be the difference between the “De-identification/Pseudonymization” and “Anonymization” .

In Forensic destruction of data, early DOD standards required data erasure for several times  before a data holding device is said to be sanitized. This implies that even when data is forensically erased, a certain number of repetitions are required to ensure that the process cannot be reversed by an intelligent de-sanitization algorithm.

The essence of this “Anonymization” through forensic over writing of data bits is to randomize the overwriting process so that it cannot be reversed.

The standard of anonymization that can be recommended to DPA is therefore not necessarily over writing all bits to be sanitized with a zero bit several times.

It can be different and is aimed at randomizing the binary bit distribution in the data holding device. An example of such a process could be..

a) Overwrite all the bit sets that represent the identification parameters with zero but in a random sequence. (This presupposes that the data set can be divided into identity parameters and other data associated with the identity parameters)

b) Repeat by over writing all the bit sets once again with say 1 again in a random sequence

c) Repeat by spraying zeros and ones randomly on all the data bits in the zone

This process may leave a random distribution of zeros and ones in the selected zone which cannot be reversed. As long as the rest of the data does not contain any identity parameters, the data can be considered as “Anonymized”.

May be technology experts can throw more light on this.

Naavi

Reference:

DOD standard for data erasure