RBI restricts American Express and Diners Club from on-boarding new customers from 1 May

Reserve Bank of India (RBI) has imposed the restrictions on American Express Banking Corp and Diners Club International by an order dated April 23, 2021.

The Reserve Bank of India (RBI) on Friday, restricted American Express Banking Corp and Diners Club International Ltd from orientating new domestic customers onto their card networks from May 1 for violating data storage norms.

However, the new order issued by the RBI stated that the recent move will not impact the existing customers of these two entities.

For the uninitiated, American Express Banking Corp and Diners Club International Ltd are Payment System Operators authorised to operate card networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).

According to the recent reports, RBI has imposed the restrictions on American Express Banking Corp and Diners Club International by an order dated April 23, 2021.

“These entities have been found non-compliant with the directions on Storage of Payment System Data,” the RBI said, as reported by the Mint.

The central bank further added that a supervisory action has been taken in exercise of powers vested in RBI under the PSS Act.

In April 2018, all payment system providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details/information collected/carried/processed as part of the message/payment instruction) relating to payment systems operated by them is stored in a system only in India, reported the Mint.

American Express Banking Corp and Diners Club International Ltd were also required to report compliance to the RBI and were asked to submit a board-approved System Audit Report (SAR) conducted by a CERT-In empanelled auditor within the timelines specified.

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