iNDICA NEWS BUREAU-
Nearly a year after India’s apex bank the Reserve Bank of India (RBI) has rolled back its instruction to the US-based financial services company Mastercard against adding new customers in the country.
“We welcome and are grateful for today’s decision by the Reserve Bank of India, enabling us to resume onboarding of new domestic customers (debit, credit and prepaid) onto our card network in the country with immediate effect,” the company authorities said in a statement. “As we have in our engagement with the RBI, we reaffirm our commitment to support the digital needs of India, its people and its businesses.”
In July last year, the RBI had announced the ban saying that it was acting against the US-based company headquartered in New York and global headquarters in Missouri, under the section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act), which gives permission to Mastercard to operate a card network in India.
This year the Indian government has asked the VPN companies providing service in India to handover all data pertaining to local users to the government or shut down operations. Most VPN service providers have decided to shut the India-based servers rather than complying with a rule that breacher user privacy.
The ban disallowing the company’s Asia Pacific branch from adding new domestic debit card, credit card or prepaid card customers onto its network came into effect from July 22 last year. The RBI had said, the action was taken against the company for non-compliance with data storage rules.
“Notwithstanding lapse of considerable time and adequate opportunities being given, the entry has been found to be non-compliant with the directions on Storage of Payment System Data. This order will not impact existing customers of Mastercard,” the RBI had said in a statement.
Prior to the action against Mastercard, in April 2021 RBI had issued similar ban on American Express Banking Corp and Diners Club International Ltd against onboarding new domestic customers under the same section from May 1, last year.
The RBI had argued; “These entities were told to make sure that all data pertaining to the payment systems they run would be stored in a system only in India within six months of a circular on Storage of Payment System Data (issued on April 6, 2018).”
“They were also required to report compliance to RBI and submit a Board-approved System Audit Report conducted by a CERT-In empaneled auditor.”
RBI said the foreign banks were instructed to store the data for Indian payments locally for “unfettered supervisory access.”
The RBI decision had drawn heavy criticism from the US trade lobbies.
Brendan A Lynch, deputy assistant US trade representative for South and Central Asia, had described the decision as “draconian” that led to panic.
“We have started hearing from stakeholders about some pretty draconian measures that the RBI has taken over the past couple of days,” Lynch had said.
