RBI on Mastercard: The Reserve Bank of India (RBI) has taken strong action on MasterCard Asia Pacific and barred it from issuing new debit or credit cards and prepaid cards. The Reserve Bank has taken this action on the part of Mastercard for not following the data maintenance rules. The effect of the Reserve Bank’s action is also likely to have an impact on the digital banking economy in India. Because Mastercard is a big player in this field.
Prohibition on issuing new cards on Mastercard
The ban on issuing new cards on MasterCard will come into effect from July 22. The RBI has taken this action due to the violation of the rules related to the storage of payment system data on behalf of Mastercard. The RBI said that MasterCard has failed despite giving sufficient time and opportunity to comply with the instructions related to the storage of payment system data. RBI has taken this action under Section 17 of the Payment and Settlement Systems Act.
Existing customers will not be affected
However, the Reserve Bank has also made it clear that this move will not affect the existing customers of Mastercard. Mastercard will advise all card-issuing banks and non-banks to follow these instructions. Mastercard is a payment system operator. Which operates the card network in the country. Let us tell you that a few months ago, the RBI had banned American Express and Diners Club International from issuing new cards for violating similar rules.
What are the rules of RBI
On 6 April 2018, RBI had issued rules related to data storage for all companies, with fintech providing payment services. According to these rules, all payment service provider companies were to store end-to-end details of payment transactions, all collected information, customer data, etc., data only in India. Companies were given 6 months to implement these rules. These rules were to be followed by card companies like Mastercard, American Express, and Visa as well as fintech companies like GPay, Amazon Pay, Phone-Pe.