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US trade official called RBI’s ban on Mastercard ‘draconian’: Reports

The ban had reportedly triggered a series of emails between US officials in Washington and in India in which they had discussed the next steps with Mastercard.
Reserve Bank of India had restricted Mastercard from acquiring new customers from July 22, 2021.(Reuters)
Published on Sep 19, 2021 06:06 PM IST
By hindustantimes.com, Hindustan Times, New Delhi

Following India’s decision in July to ban Mastercard from acquiring new customers, a senior US trade official had called the decision “draconian” and said it caused “panic” news agency Reuters reported based on US government emails.

The ban had reportedly triggered a series of emails between US officials in Washington and in India in which they had discussed the next steps with Mastercard, including approaching the Reserve Bank of India (RBI), Reuters reported citing the emails.

“We've started hearing from stakeholders about some pretty draconian measures that the RBI has taken over the past couple days,” Reuters cited from an email by Brendan A Lynch, the deputy assistant US trade representative for South and Central Asia. The email was originally sent on July 16, two days after RBI had announced the ban on Mastercard.

“It sounds like some others (Amex, Diners) may have been impacted by similar actions recently,” Lynch wrote in the email, asking his colleagues to contact the RBI “to see what’s going on,” Reuters further reported.

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However, a Mastercard spokesperson said that the discussions with the RBI have made progress and looks to resolve the situation quickly. “We have had very constructive engagements with the Indian and US governments over the past few weeks and appreciate the support of both,” Reuters quoted the spokesperson as saying.

Earlier on July 14, the Reserve Bank of India had restricted Mastercard from acquiring new customers from July 22, 2021, due to the company’s non-compliance with local data storage rules. “The Reserve Bank of India (RBI) has today imposed restrictions on Mastercard Asia / Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021. Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data,” the RBI had said.

However, the order would only prevent new customers from being onboarded and existing customers would not be affected. Mastercard had said that it had submitted an additional audit report to the RBI before the ban took effect on July 22.

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