The Reserve Bank of India (RBI) has told American Express Banking Corp. and Diners Club International Ltd. to not bring new domestic clients onto their card networks beginning on May 1, although it noted that its order would not affect current clients, according to a Friday (April 23) press release.
“These entities have been found non-compliant with the directions on Storage of Payment System Data,” the central bank said in the release, noting that both of the entities have permission to run card networks in India via the Payment and Settlement Systems Act, 2007 (PSS Act).
RBI said that the “supervisory action” had been taken in the powers given to the central bank under PSS Act’s Section 17.
The central bank said that all payment service providers were told to make sure that all of the data pertaining to payment systems that they run is kept on a system just in India within six months from a RBI circular on Storage of Payment System Data dated April 6, 2018.
“They were also required to report compliance to RBI and submit a Board-approved System Audit Report (SAR) conducted by a CERT-In empanelled auditor within the timelines specified therein,” according to the press release.
In a statement reported by local media, American Express said, “We have been in regular dialogue with the Reserve Bank of India about data [localization] requirements and have demonstrated our progress towards complying with the regulation. While we’re disappointed that the RBI has taken this course of action, we are working with them to resolve their concerns as quickly as possible.”
The company said that the action does not impact the service it provides to its current clients in the country, while its clients have the ability to keep utilizing and taking its cards as they usually do.
At the beginning of 2021, the RBI said it was launching its Digital Payments Index, which had the goal of tracking the expansion of cashless transactions conducted within the country.