The Reserve Bank of India (RBI) has restricted global card issuer Mastercard from onboarding new customers in India over non-compliance with data storage regulations. The central bank said Mastercard was found 'non-compliant' despite being given adequate opportunities to meet the regulations.
Through a circular dated April 6, 2018, RBI had directed all payment system providers to ensure that their entire data including full end-to-end transaction detail, information collected, carried or processed as part of the message and payment instruction, was stored only in India within a period of six months.
The restrictions placed by the RBI bars Mastercard from onboarding new clients - debit, credit, or prepaid - onto its card network from July 22, 2021. The action will directly impact the global financial services company's business in India.
However, the current order will not affect existing Mastercard customers. Mastercard is yet to come out with a statement on the issue.
The RBI had earlier observed that payments system providers, especially the global players, were storing data of domestic customers outside India.
Global companies typically have a centralised system of data storage. Beyond data privacy risks, the risk is of unforeseen global events, which could impact the payments system in India if data is stored outside the country.
Many of them have made numerous representations to the RBI in the past and have asked for more time to meet the regulations.
The RBI had imposed similar restrictions on American Express and Diners Club International earlier in the year. The two card issuers were stopped from onboarding new customers from May onwards. But global firms are not alone in facing RBI's wrath on issues pertaining to digital banking.
The RBI had also prohibited private sector lender HDFC Bank from adding new credit card customers and launching digital businesses in December last year. The action was taken after HDFC Bank's digital payment services were hit by a series of technical outages.
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