Category: Compliance

Why It’s Important to Understand DPDP Before Putting It into Practice

India’s new data protection law—the Digital Personal Data Protection Act (DPDPA) 2023 and its accompanying rules from 2025—is changing everything about how companies handle personal data. Privacy isn’t just about having the right policies on paper anymore. It’s now something you need to actively manage, be accountable for, and take seriously at the highest levels of your organization.

As we mark Data Privacy Day and everyone’s talking about compliance and readiness, here’s the thing: you can’t implement DPDP if you don’t really understand it first.

That’s exactly why Day 1 of QRC’s DPDP Implementer Workshop was all about building that foundation—understanding the why, what, and who before diving into the how.

The Reality Check: Most People Still Don’t Know About DPDP

Even though this law is a big deal, awareness is surprisingly low:

• Only 16% of consumers have even heard of the DPDP Act
• More than half (56%) don’t know what data protection rights they have
• 69% don’t realize they can withdraw their consent
• 72% have no idea that companies need parental consent to use children’s data

And it’s not much better on the business side:

• Only 40% of organizations say they understand DPDP
• Just 9% feel they truly have a comprehensive grasp of it

These numbers show us something important: when companies fail at DPDP compliance, it’s usually not because they don’t care—it’s because they didn’t fully understand what they were supposed to do in the first place.

What’s DPDP Actually Trying to Do?

At its heart, the DPDP Act is about:

• Protecting people’s digital personal data
• Making sure data is processed lawfully and responsibly
• Finding the right balance between privacy and innovation (including AI)
• Setting up proper enforcement through the Data Protection Board of India
• Creating one consistent privacy framework that works across all industries in India

The law puts people—called “Data Principals”—at the center, while giving clear responsibilities to the organizations handling their data.

Who’s Who in the DPDP World

One of the most important things we covered on Day 1 was getting clear on the different roles. DPDP introduces specific accountability structures:

• Data Principal: That’s you—the person whose data is being used
• Data Fiduciary: The organization that decides why and how your personal data is processed
• Data Processor: A company that processes data on behalf of a Data Fiduciary
• Consent Manager: A registered intermediary that helps you give, manage, and withdraw your consent

Getting these roles right matters a lot, because who’s responsible for what—and who gets penalized if things go wrong—depends entirely on these classifications.

What Does DPDP Actually Cover?

Covered:

• Digital personal data
• Offline data once it’s been digitized
• Processing that happens in India
• Processing outside India if you’re offering services to people in India

Not covered:

• Offline data that stays offline
• Personal or household activities
• Information that’s already publicly available

This means DPDP applies to pretty much everyone—big companies, small startups, and even foreign companies serving Indian customers.

What Rights Do People Actually Have?

DPDP gives individuals real, enforceable rights:

• Right to Access: Find out what personal data a company has on you and who they’ve shared it with
• Right to Correction & Erasure: Fix wrong information or delete data that’s no longer needed
• Right to Grievance Redressal: Complain to the company, and if that doesn’t work, escalate to the Data Protection Board
• Right to Nominate: Choose someone to exercise your rights if something happens to you

These aren’t just theoretical rights—companies need to set up actual processes and systems to handle these requests.

Consent: It’s Not What You Think

Under DPDP, consent has to be:

• Freely given (no pressure)
• Informed and specific (you know exactly what you’re agreeing to)
• Clear and unambiguous
• Unbundled (not hidden in a package deal)
• As easy to withdraw as it is to give

This changes everything about how companies design their consent forms, privacy notices, and user experiences. Those old “I agree to everything” checkboxes won’t cut it anymore.

What Organizations Need to Do

Companies acting as Data Fiduciaries must:

• Put in place proper technical and organizational safeguards
• Only use data for the purposes they stated
• Tell both the Data Protection Board and affected people if there’s a data breach
• Delete personal data when consent is withdrawn or they don’t need it anymore

DPDP compliance isn’t a one-and-done project—it’s ongoing.

Significant Data Fiduciaries: The Big Players

Some organizations get classified as “Significant Data Fiduciaries” (SDFs), which means they have extra responsibilities:

• Appointing an India-based Data Protection Officer
• Conducting Data Protection Impact Assessments
• Getting regular independent audits
• Reporting directly to the board or top management

Figuring out whether you’re an SDF is crucial, because getting this wrong can itself be a compliance violation.

The Penalties Are Real

The DPDP Act comes with serious financial penalties:

• Up to ₹250 crore for failing to implement proper security
• Up to ₹200 crore for not reporting breaches correctly
• Up to ₹200 crore for violations involving children’s data
• Up to ₹150 crore for SDF non-compliance

And here’s the thing: you can get penalized not just for actual breaches, but also for governance failures—like not conducting required assessments, messing up consent processes, or getting roles wrong.

What Comes Next

Day 1 of the workshop was deliberately focused on answering “What does DPDP actually require?” before moving to “How do we make it happen?”

As we move into Day 2 and beyond, we’ll shift to:

• Actually operationalizing these requirements
• Building privacy into day-to-day business processes
• Making DPDP work alongside existing security and governance frameworks

Privacy under DPDP isn’t something coming in the future—it’s here now, it’s enforceable, and it’s measurable.

Bottom Line

On Data Privacy Week, here’s what matters:

Organizations that treat DPDP like just another legal checkbox will struggle. Those that see it as a real transformation in how they operate will succeed.

This article is based on insights from Day 1 of QRC’s DPDP Implementer Workshop, designed to help organizations build real clarity and practical readiness for DPDP implementation.

Because checking boxes doesn’t catch breaches-and testing alone won’t save you in an audit.

“We passed the audit-so we must be secure.”  “We just did a pen test-why worry about compliance right now?”

If either of these sounds familiar, you’re not alone. Plenty of companies confuse compliance with security testing. Or worse, they treat one as a replacement for the other.

The reality?

Compliance and security testing are not interchangeable. They serve different purposes, solve different problems, and protect you from different types of risks. If you care about long-term resilience-against both cyber threats and regulatory action-you need both.

Here’s why.

What Compliance Really Means (and What It Doesn’t)

Compliance is all about meeting requirements set by a regulator, customer, or industry framework-think ISO 27001, PCI DSS, SOC 2, RBI guidelines, or GDPR. It typically involves:

• Documenting your policies and controls
• Showing that they’re being followed
• Proving you’re managing risk according to a recognized framework

In short: compliance is about being able to demonstrate good governance.

But here’s the catch: Compliance doesn’t test how well those controls actually work.

You might have a firewall policy, but no one’s checked if it’s correctly configured. You might require MFA, but it’s not enforced across every app. You might log incidents-but never simulate a breach to see if you’d catch one.

So, you can technically be compliant-and still be vulnerable.

What Security Testing Does That Compliance Doesn’t

Security testing is about looking under the hood. It’s how you find out what’s actually exposed, exploitable, or misconfigured.

This includes:

• Vulnerability scans (automated tools to find weak spots)
• Penetration testing (real-world attack simulation)
• Red teaming (testing how your teams respond to breaches)
• Code reviews, cloud config reviews, API testing-and more

Unlike compliance, which is often about process and policy, security testing is about technical assurance. It answers the question:

“If someone tried to break in right now, could they?”

It doesn’t care what your policies say-it checks what’s actually happening in your systems.

Where Businesses Get It Wrong

The most common mistake? Choosing one and ignoring the other.

Example 1: Compliant but Insecure

A company passes its PCI DSS audit. But it later suffers a data breach because a misconfigured S3 bucket was publicly accessible. The compliance report didn’t catch it-because it wasn’t tested.

Example 2: Secure but Non-Compliant

Another company runs regular pen tests and patches vulnerabilities quickly. But it fails an audit because it doesn’t have documented policies, audit logs, or a formal incident response plan. They’re secure-but they can’t prove it.

Both companies lose. One suffers a breach. The other fails an audit. Neither is truly protected.

Why You Need Both-Integrated, Not Isolated

When you treat compliance and testing as two separate boxes to tick, things fall through the cracks. But when you integrate them, they make each other stronger. Here’s what that looks like:

• Your pen test results feed into your compliance risk register
• Your compliance controls are tested regularly, not just reviewed annually
• You use security testing as proof that your controls actually work
• You build a cycle where policy, practice, and testing reinforce each other

This isn’t about adding more work-it’s about making your existing security and compliance efforts actually matter.

A Few Practical Tips to Bring It Together

• Don’t do security testing just for the audit. : Use it as an ongoing risk management activity-schedule quarterly or release-based tests.
• Map test findings to compliance requirements. : If your pen test reveals a privilege escalation flaw, that’s a gap in access control-a common audit focus area.
• Keep your audit evidence fresh. : Testing reports, mitigation plans, and control validations are all great audit artifacts-if they’re current and well-documented.
• Invest in continuous compliance tools. : Platforms that combine control tracking, task assignments, evidence management, and testing integration make this far easier.
• Involve both teams early. : Security and compliance teams often work in silos. Bring them together at the start of the quarter-not a week before the audit.

Final Word: It’s Not Either-Or.  It’s Both.

Compliance protects you from regulators. Security testing protects you from attackers. You need both-because real risk doesn’t care which one you skipped. The companies that win in the long run don’t just check boxes or run one-off scans. They build a culture where testing and compliance are part of everyday operations.

That’s how you stay resilient-on paper, and in practice.

Need Help Combining Security Testing and Compliance?

QRC Assurance helps companies embed technical assurance into their compliance lifecycle. From PCI DSS to ISO 27001, from VAPT to board-level reporting-we help you close the gap between policy and practice.

connect@qrcsolutionz.com | www.qrcsolutionz.com

Financial institutions don’t operate in isolation. From cloud providers to payment processors, third-party vendors play a major role in keeping operations running smoothly. But here’s the problem—every external vendor you work with introduces a potential security risk. A single weak link in your supply chain could open the door to data breaches, service disruptions, regulatory penalties, and reputational damage.

In fact, a large portion of cyberattacks in recent years didn’t start with internal systems. They started with third parties. That’s exactly why SEBI’s Cyber Security and Cyber Resilience Framework (CSCRF) has taken a strong stance on Third-Party Risk Management (TPRM). The message is clear: If your vendors don’t meet security standards, your organization will still be held accountable. So, how do you ensure your vendors are not your weakest link? Let’s break it down.

1) Why Third-Party Risk Is a Big Deal?
Modern attackers don’t always come through the front door. They often look for easier access points—your vendors. If those vendors have inadequate security controls, hackers can exploit their access to infiltrate your systems. Real-World Breaches That Started with Vendors:

• Target (2013): Hackers breached Target’s network via an HVAC vendor, compromising 40 million card records.
• SolarWinds (2020): Malicious code inserted into software updates affected thousands, including government bodies.
• Equifax (2017): A third-party web application vulnerability exposed data of 147 million customers.

  If these global giants can fall, any organization can—unless proper safeguards are in place.

SEBI CSCRF’s View on Third-Party Security
SEBI mandates that financial institutions take full ownership of vendor risk. Even if an incident originates outside your organization, the responsibility—and liability—remains yours.  Key SEBI CSCF Requirements for TPRM:

• Vendor Risk Assessments: Conduct pre-onboarding assessments to evaluate security posture, certifications, past breaches, and infrastructure readiness.
• Continuous Monitoring: One-time checks aren’t enough. Ongoing risk reviews and vendor monitoring are mandatory.
• Security Clauses in Contracts: Legal agreements must clearly define responsibilities, encryption standards, breach timelines, and more.
• Incident Reporting: Vendors must report breaches immediately and cooperate during investigations.
• Periodic Audits: Regular vendor audits ensure long-term compliance and reduce blind spots.

2) How to Ensure Vendor Compliance with SEBI CSCF?

a) Set Strict Security Standards for Vendors

b) Conduct Security Assessments Before Onboarding
Before signing the contract:

c) Enforce Cybersecurity Obligations in Contracts
Your vendor contracts must include:

Financial institutions don’t operate in isolation. From cloud providers to payment processors, third-party vendors play a major role in keeping operations running smoothly. But here’s the problem—every external vendor you work with introduces a potential security risk. A single weak link in your supply chain could open the door to data breaches, service disruptions, regulatory penalties, and reputational damage.

In fact, a large portion of cyberattacks in recent years didn’t start with internal systems. They started with third parties. That’s exactly why SEBI’s Cyber Security and Cyber Resilience Framework (CSCRF) has taken a strong stance on Third-Party Risk Management (TPRM). The message is clear: If your vendors don’t meet security standards, your organization will still be held accountable. So, how do you ensure your vendors are not your weakest link? Let’s break it down.

1) Why Third-Party Risk Is a Big Deal?
Modern attackers don’t always come through the front door. They often look for easier access points—your vendors. If those vendors have inadequate security controls, hackers can exploit their access to infiltrate your systems. Real-World Breaches That Started with Vendors:

• Target (2013): Hackers breached Target’s network via an HVAC vendor, compromising 40 million card records.
• SolarWinds (2020): Malicious code inserted into software updates affected thousands, including government bodies.
• Equifax (2017): A third-party web application vulnerability exposed data of 147 million customers.

  If these global giants can fall, any organization can—unless proper safeguards are in place.

SEBI CSCRF’s View on Third-Party Security
SEBI mandates that financial institutions take full ownership of vendor risk. Even if an incident originates outside your organization, the responsibility—and liability—remains yours.  Key SEBI CSCF Requirements for TPRM:

• Vendor Risk Assessments: Conduct pre-onboarding assessments to evaluate security posture, certifications, past breaches, and infrastructure readiness.
• Continuous Monitoring: One-time checks aren’t enough. Ongoing risk reviews and vendor monitoring are mandatory.
• Security Clauses in Contracts: Legal agreements must clearly define responsibilities, encryption standards, breach timelines, and more.
• Incident Reporting: Vendors must report breaches immediately and cooperate during investigations.
• Periodic Audits: Regular vendor audits ensure long-term compliance and reduce blind spots.

2) How to Ensure Vendor Compliance with SEBI CSCF?

a) Set Strict Security Standards for Vendors

b) Conduct Security Assessments Before Onboarding
Before signing the contract:

c) Enforce Cybersecurity Obligations in Contracts
Your vendor contracts must include:

d) Monitor Vendor Security Continuously
Even a compliant vendor today can become a liability tomorrow.

e) Prepare for Vendor-Related Incidents
No system is breach-proof—but you can be breach-prepared:

TPRM Quick Checklist:

Final Thoughts:
SEBI’s CSCRF framework leaves no room for complacency when it comes to third-party risk. The takeaway is simple but critical :
Your vendors’ security is your security.

To protect your organization, reputation, and regulatory standing :

• Assess vendors before signing contracts
• Set strict cybersecurity requirements
• Monitor vendors regularly, not just once
• Enforce security controls through contracts
• Be prepared for vendor-related breaches

With a strong Third-Party Risk Management strategy, financial institutions can stay SEBI-compliant, reduce risk exposure, and safeguard their digital ecosystem from growing supply chain threats.