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RBI bars Mastercard from taking new customers

Global network payment processor fails to comply with data storage norms; Decision effective from July 22; Earlier, apex bank had restricted American Express Banking Corp and Diners Club International Ltd

RBI bars Mastercard from taking new customers
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RBI bars Mastercard from taking new customers 

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The Reserve Bank of India (RBI) on Wednesday barred Mastercard Asia Pacific from onboarding new credit, debit and prepaid card customers with effect from July 22 as it failed to comply with data storage norms.

The supervisory action will not impact existing customers of Mastercard, the Reserve Bank of India (RBI) said. Taking action against Mastercard, RBI said, "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." According to RBI, the directions will not impact existing customers of Mastercard.

"Mastercard shall advise all card issuing banks and non-banks to conform to these directions." In terms of its circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India, as per the central bank. Mastercards becomes the third major Payment System Operator, on which restrictions have been imposed for non-compliance with RBI's direction on Storage of Payment System Data.

Banks gaining on corporate banking:

The Reserve Bank of India's (RBI) insistence on companies opening current accounts with banks is among the factors that helped large lenders such as HDFC Bank, ICICI Bank and SBI raise their shares of the competitive corporate banking market in 2020, according to a report.

Apart from the RBI rules, the government's mega merger to reduce the number of state-owned banks has also helped in the trend, rating agency Crisil said on Wednesday in the report. In mid-2020, the RBI had come up with the circular that specified which bank can open a current account for a borrower, in order to check any misuse through multiple current accounts. A fourth of the large and medium corporates said they were banking with at least one among ICICI Bank, Axis Bank and HDFC Bank as against 17 per cent in 2016.

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