You are here: Home » Reuters » News
Business Standard

Exclusive: India proposes easing local data storage rules for foreign payment firms - document

Reuters  |  NEW DELHI 

By Shah and Aditya Kalra

NEW DELHI (Reuters) - India's has proposed relaxing a directive from the country's central that would compel global payment firms to store customer data only locally, following weeks of intense lobbying by companies and trade bodies.

Easing the proposal would be a relief for firms including MasterCard, and American Express, which fear India's data onshoring move could cost them millions of dollars and set a precedent for other major governments to implement similar rules at a time when there is heightened scrutiny of how companies globally handle their customers' data.

has been aggressively pushing digital and cashless modes of payment that leave an electronic trail as part of a campaign to crack down on the black economy.

Foreign payment companies were caught off in April by the Reserve of India's (RBI) one-page directive that said all payments data should, within six months, be stored only in the country for "unfettered supervisory access".

India's finance ministry, in a meeting held in June with RBI officials and executives from payment firms, said that a could be that companies would be allowed to store data offshore, as long as a copy was kept in

The companies had opposed the restriction on storing data overseas and had lobbied for its removal.

The ministry has also proposed clarifying the kind of data that needed to be stored and the time given to implement the directive, according to a copy of the minutes of the meeting reviewed by

At the June meeting, RBI director S Ganesh Kumar said the central had been approached about the companies' concerns and was in the process of issuing a circular to clarify the rules, according to the minutes. Suggestions made at the meeting would be helpful in deciding the matter, Kumar said.

The meeting was chaired by the government's and attended by other ministry and RBI officials, as well as executives from companies including MasterCard, and

and declined to comment. and RBI did not respond to an email seeking comment.

"This is a big step and shows has a progressive outlook towards businesses," said an with one of the payment companies, adding that the ministry had tried to address some of the industry's biggest grouses.

"This will hopefully serve as a precedent for other regulators who might be thinking of data localisation," said a familiar with the matter, adding that this would also allow for and analytics - which is currently done offshore - to continue.


The RBI had initially resisted a joint lobbying effort by the foreign payment companies, with sources with direct knowledge of the matter telling in May that the central bank was telling the firms to comply, not complain.

The industry's main concerns have been over restricting data storage to India, a lack of clarity on the type of data that needed to be stored and the timeline to implement the rules.

During the June meeting, representatives from lobby group U.S.-Business Council (USIBC) said that storing the data only in India would be a security risk, as in the event of a natural disaster no-one would have access to it if it was all stored in one place.

The representatives also said that only after understanding the kind of data that needed to be stored would they be able to estimate the time needed to set up the necessary infrastructure.

Global payment firms currently store and process Indian transactions outside the country. The RBI's directive comes as more people in India are switching to plastic, partly driven by the Modi government's decision to replace high-value currency notes in November 2016, since when the government has aggressively discouraged cash transactions.

In March, Indians clocked transactions worth $52 billion using their 900 million credit and debit cards, nearly double the amount recorded in November 2016, data from the RBI showed.

But rising fraud is a concern too. The RBI in April said the payment ecosystem in India had "expanded considerably", making it necessary to ensure "the safety and security" of data.

(Reporting by Shah and Aditya Kalra; Editing by Alex Richardson)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, July 11 2018. 21:08 IST