The Reserve Bank of India (RBI) has barred US-based Mastercard from on boarding any new customers in India over non-compliance with the local data storage norms. G Padmanabhan, Former Executive Director of RBI, discussed this further. He is also an Independent Non-Executive Director at Axis Bank.
The Reserve Bank of India (RBI) has barred US-based Mastercard from onboarding any new customers in India over non-compliance with the local data storage norms. G Padmanabhan, Former Executive Director of RBI, discussed this further. He is also an Independent Non-Executive Director at Axis Bank.
“I think the banks will not be able to add-on new customers by issue of Mastercard. For existing customers, it would not make any difference. Loss of revenues for the banks – that depends upon whether that can happen. If a bank has a tie-up with only one network provider, Master, and nobody else, which means they cannot add on to the existing customers,” he said.
“As far as I understand the system, I don’t think there is any bank in this country, which has exclusive arrangements just with one card, so I think it will not make too much of a difference,” he added.
According to Padmanabhan, there won’t be any slowdown in card issuance.
“As long as the bank has tie-up with visa, I don’t think it is going to create any slowdown, it will create a slowdown as far as the Mastercard is concerned but I don’t think as far as customers are concerned it is going to have a major impact,” he explained.
In terms of compliance, he further mentioned, “If you look at the action taken by RBI, it involves three multinational card companies. So, when we make such a momentous change, it takes an enormous amount of time to build a system, which is India specific when you are part of a consolidated system. That challenge exists for all these companies.”
“There are two aspects – from a regulatory perspective – do I show enough intent to comply and secondly the time that I would need. I would say, even among the card companies it could differ because the systems they run are different. So RBI from 2018 has been pushing and either this has happened in full or the compliance report would have submitted, RBI found certain shortcomings and the action has been taken. Unless and until this process is completed, validated and signed off and RBI accepts this, I would presume that the existing situation is likely to continue,” he added.
For the full interview, watch the accompanying video.