DPDP Draft Rules Pose Challenges For Banks & NBFCs On Customer Data Sharing

ENA Sectors 2025-01-07 15:38:57 New Delhi, Jan 7 (KNN) The financial sector is grappling with potential challenges following the release of draft rules under the Digital Personal Data Protection (DPDP) Act, which could significantly impact how banks and NBFCs share customer data within their corporate groups. The proposed regulations would require financial institutions to obtain explicit customer consent before sharing personal information with their subsidiaries, marking a departure from current practices. Currently, banks and NBFCs freely share customer data across their subsidiary networks, enabling them to offer various financial products such as insurance, mutual funds, and demat accounts to customers who open savings accounts. This established practice has been crucial for cost-effective cross-selling of financial services. However, as Siddharth Vishwanath, Advisory Markets leader at PwC India, notes, The cross-selling of products and services will now become dependent on obtaining customer consent. Banks and NBFCs will need to invest more time in educating customers about how their data will be used responsibly. The draft rules introduce strict limitations on data usage, as explained by EY partner Samir Shah: The draft rules permit banks and NBFCs to use customer data exclusively for the specific purpose for which it is collected. For instance, if a bank gathers data to open a savings account, that data cannot be used to cross-market other products or services unless the customer provides explicit consent for such use. A particularly significant challenge lies in obtaining consent from existing customers, especially in semi-urban and rural areas where digital banking adoption remains limited. According to industry experts, reaching out to customers who primarily rely on branches or banking correspondents, as well as those who use banking services infrequently, will pose substantial operational challenges for financial institutions. Banks are expected to develop strategies to secure customer consent while maintaining their cross-selling capabilities within the new regulatory framework. (KNN Bureau) 40550 https://knnindia.co.in/news/newsdetails/sectors/dpdp-draft-rules-pose-challenges-for-banks-nbfcs-on-customer-data-sharing 2025-01-07 15:38:57 knnindia.co.in DPDP Draft Rules Pose Challenges For Banks & NBFCs On Customer Data Sharing