RBI Action on American Express and Diners Club will not be Able to Add New Customers
The Reserve Bank of India (RBI) has slammed the credit card company American Express Banking Corporation and Diners Club International Limited for not following its ‘storage of payment system data’ rules. Also, the RBI has banned these companies from issuing credit cards to new domestic customers from May 1. In such a situation, these companies will no longer be able to add new customers to their network.
According to the RBI rules, it is mandatory for all companies doing any work related to payment in the country to store its data in the country itself, but both companies did not follow these rules. In such a situation, the RBI took this action against both the companies. The central bank said in a statement on Friday that the order would not affect the existing customers of these two companies.
Violation of rules
American Express Banking Corporation and Diners Club International Limited are the payment system operators. Both are authorized to operate the card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act). RBI imposed the ban on American Express Banking Corporation and Diners Club International under an order issued on April 23, 2021. The central bank said, “These units were not following the instructions regarding data and information storage related to the payment system.”
It is noteworthy that in April 2018, all service providers connected with the payment system were asked to ensure that the data and information related to the payment system operated by them is to be kept within six months in the prescribed system in India. He was also required to inform the RBI about compliance. Also, the ‘System Audit Report’ made by the auditors on the panel of the Indian Computer Emergency Response Team (CERT-In) was to be submitted with the approval of the Board of Directors.