Amidst the immediate and impending concerns around generative artificial intelligence including deepfakes, the Indian Government has been contemplating, since a long time now, to reform the existing Information Technology Laws to regulate on the issue. The Government had announced revamping the existing Cyber laws and replace them with the new Digital India Bill which is likely to be notified post the Lok Sabha Elections. Therefore, now the Ministry of Electronics and Information Technology (Meity) is soon to notify some key amendments in the Information Technology Rules 2021 (hereinafter referred to as the "Rules") with the aim to introduce rules for regulating artificial intelligence companies and generative AI models.

The Union Minister, Shri Rajeev Chandrasekhar on January 16, 2024 clarified that the amendments are soon to be notified possibly by the end of January 2024.1

The Proposed Amendments

1. AI algorithms should be free from bias – The amendments are likely to mandate that the AI algorithms that various organisations and social media intermediaries use to be free from biases.

What is AI bias?

Human biases are well-documented for and these biases can also make their way into the artificial intelligence systems.

Machine learning bias, also known as algorithmic bias or Artificial Intelligence bias, refers to the tendency of algorithms to reflect human biases. It is a phenomenon that arises when an algorithm delivers biased results as a consequence of erroneous assumptions of the Machine Learning process. This is an issue because the algorithms are just reinforcing the biases that humans have!

In 2018, the famous e-commerce giant, Amazon, scrapped AI recruiting tool that showed bias against women.2 Amazon had deployed the AI tools in the year 2014 which was eventually trained to vet applicants by observing patterns in resumes submitted to the company over a 10 year period. Most of these applications, came from men! Thus, the systems taught itself that male candidates were preferable than their female counterparts.

As reported, the proposed amendments in the Rules are likely to be centered around the following parameters:3

  1. Caste,
  2. Religion
  3. Community
  4. National security

However, these parameters are not exhaustive i.e. there exist more parameters for biases. In March 2023, the United Nations had convened a global dialogue to break through bias in AI' on International Women's Day March 2023 addressing the anti-female biases in AI. Thus, biases based on gender, ethnicity and geographical location are some parameters that have been acknowledged internationally. Thus, these parameters should also be taken into account by the Indian government while drafting rules in this area.

2. New Rules for Deepfakes – The IT Rules amendments may also bring new rules to check as well prevent deepfake and synthetic content. Meity on numerous occasions has taken cognizance on the spread of misinformation and synthetic content on various social media platforms more specifically deepfakes.

The implications of deepfakes begin to startle as one realizes the potential harm it can create, in fact, has created. Deepfakes are, prima facie, exploitation of facts to develop and create aesthetically false narratives. The proposed rules are, thus, expected to deal with the detection and flagging of synthetic content prepared using manipulative AI along with penalizing the malicious creation and/or distribution of fake information.

To read more on this, refer to our article:

3. Strict guidelines for loan apps – The Amendments are also likely to contain explicit instructions for online platforms on loan apps. Recently, the Government on December 27, 2023 issued directions to the social media platforms which reads as 'intermediaries and platforms should take additional measures to not permit any advertisements of illegal loan and betting apps having the potential to scam and mislead the users, the consequences of which will be the sole responsibility of the intermediaries and the platforms.

As a measure, Google has suspended over 2500 fraudulent loan apps from Play Store between April 2021 and July 2022.4 Meity has also issued an advisory directing all social media platforms to take "additional measures" to ensure that they don't host advertisements of fraudulent apps, warning that the 'consequences' will be 'sole responsibility' of such intermediaries/platforms.5

To read more, refer to our article:

Rise in fraudulent loan apps

Recently, a resident of Ghosi village in Uttar Pradesh had borrowed INR 15,000 form a loan app that he had found on Instagram, named as UnicashX. The borrower could not know about the fraudulent nature of the App as it claimed that it was backed by a Non-banking financial company (NBFC). However, contrary to the claims, the borrower was harassed to return the money and the app demanded INR 50, 000. However, when the borrowed sum was returned, he started to receive threatening messages on WhatsApp.6

There has been significant increase in the advertisements of illegal instant loan apps that lend small amounts to desperate borrowers at exorbitantly high interest rates and resort to harassment and even blackmailing later on. A report by a credit information company, Experian, disclosed that the digital lending market has witnessed an annual growth rate of almost 40 per cent with most of them being supported by NBFCs and Banks.7

To understand, the evolution of technology has also revolutionize the financial markets thereby impacting lending and investment services greatly. The entire financial market has now adapted the 'digital' landscape in providing services thereby making way for paradigm transformation in this sector. However, this fintech market is also entrusted with certain regulatory responsibilities and are governed by the Reserve Bank of India.

Why these Amendments?

  1. There is an urgent and immediate need to legislate on AI applications to ensure ethical use of AI, safeguarding human and constitutional rights of individuals and mitigate social and economic impact and also to observe the internationally set standards regulating AI;
  2. As reported, the government was contemplating to introduce the Digital India Bill bringing the paradigm shift in the existing landscape of cyber laws however, the Bill is unlikely to be tabled before the Lok Sabha Elections 2024. Resultantly, the decision to amend the IT Rules considering the rapid developments around generative AI.









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