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RBI banned Mastercard

RBI's decision will not impact existing customers of Mastercard. (Photo: Pixabay)

Why has RBI banned Mastercard from issuing new cards

The Reserve Bank of India (RBI) has banned Mastercard Inc from issuing new debit or credit or prepaid cards to domestic customers for violating data storage rules.

“RBI has imposed restrictions on Mastercard Asia / Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021. Notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data,” the central bank said in a notification.

Mastercard banned in India

RBI’s decision will not impact existing customers of Mastercard, and the company should advise all card issuing banks in India to comply with the order.

“The supervisory action has been taken in exercise of powers vested in RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act),” RBI said.

In a notification, the RBI said Mastercard had not complied with data storage rules from 2018 that require foreign card networks to store Indian payments data “only in India”.

Data storage rules

In terms of RBI circular on Storage of Payment System Data dated April 6, 2018, all System Providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction) relating to payment systems operated by them is stored in a system only in India. They were also required to report compliance to RBI and submit a Board-approved System Audit Report conducted by a CERT-In empanelled auditor within the timelines specified therein.

What is Mastercard

Mastercard is a Payment System Operator authorised to operate a Card Network in the country under the PSS Act.

In April this year, the RBI had imposed restrictions on American Express Banking Corp. and Diners Club International Ltd. from on-boarding new domestic customers onto their card networks from May 1, 2021, citing non-compliance with the directions on Storage of Payment System Data. 

Also Read: Why RBI imposed huge penalty on SBI and 13 other banks