The Reserve Bank of India (RBI) has asked lenders to put in place business continuity plans (BCP) following its curbs on Mastercard last week. The central bank has sought details on their preparedness to regularise the issuance of credit and debit cards on alternative payments platforms, such as Visa and RuPay, ET reported citing three people aware of the development.
The RBI has also reached out to various lenders on the problems being faced by the broader banking system after it barred the US payments major from issuing new cards for its alleged failure to comply with data localisation rules. “The regulator has been actively pursuing banks to activate BCPs after it banned Mastercard,” the report quoted a top bank executive.
It seems that even opening of new savings accounts could be hit as the process will have to be migrated to either Visa or RuPay. SBI, HDFC Bank, ICICI Bank and Axis Bank could be the worst hit as they open hundreds of accounts every month. The industry feels that it might take at least three months to return to normal.
Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act). In terms of RBI's 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.
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 specified timelines. "Mastercard is fully committed to our legal and regulatory obligations in the markets we operate in. Since the issuance of the RBI directive requiring on-soil storage of domestic payment transaction data in 2018, we have provided consistent updates and reports regarding our activities and compliance with the required stipulations," it had said in a statement. "While we are disappointed with the stance taken by the RBI in their communication dated July 14, we will continue to work with them to provide any additional details required to resolve their concerns," it added.