RBI bars American Express, Diners Club from onboarding new customers

The Reserve Bank of India (RBI) on Friday restricted card companies American Express and Diners Club International from onboarding new domestic customers starting May 1 as they did not adhere to guidelines on local data storage.

“These entities have been found non-compliant with the directions on storage of payment system data. This order will not impact existing customers,” the RBI said in an official statement.

The central bank, in April 2018, had told all payment system providers to store their entire data in a system only in India. They were also required to report compliance to RBI and submit a Board-approved System Audit Report (SAR) conducted by a CERT-In empaneled auditor within the timelines specified therein.

The RBI had given them six months’ time for compliance.

That led to a huge hue and cry and the US based companies wanted to engage the US government to pressure India and RBI to ease rules.

Companies like Visa, Mastercard, American Express, PayPal, Google, Facebook, Microsoft and Amazon, as well as global banks, had several calls between themselves to form industry-level lobby groups opposing the RBI’s data localisation guidelines.

A few other powerful lobby groups such as the Securities Industry and Financial Markets Association (SIFMA), the Global Financial Markets Association (GFMA), and the US-India Business Council (USIBC) are also working on behalf of the US companies to try and dilute local storage rules.

Some functionaries of the Indian government initially sounded reconciliation, but the RBI remained inflexible in its approach. Thus, companies doing payment transactions in India were forced to comply.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor