The Indian Central Bank, the Reserve Bank of India, which is the overall regulator of all sorts of banking products in India, including Credit Card products, has late last night notified a new set of orders which would affect the operations of two different card network platforms in India: Diners Club and American Express.
A new order to this effect was issued late in the evening on April 23, 2021.
As you can read in the order, all Payment System Providers were notified to localise all their data in India. Now, American Express Banking Corporation, which is the Indian operating entity of American Express and Diners Club International Limited, an entity of Discover, which owns the payment network of Diners Club, has been barred from issuing new cards in India from May 1, 2021, onwards.
Reacting to this move, American Express issued a statement that said,
We have been in regular dialogue with the Reserve Bank of India about data localization requirements and have demonstrated our progress towards complying with the regulation. While we’re disappointed that the RBI has taken this course of action, we are working with them to resolve their concerns as quickly as possible. This does not impact the services that we offer to our existing customers in India, and our customers can continue to use and accept our cards as normal.
This is a surprise move, and on the back of HDFC Bank being barred from issuing cards to new customers, it is a double whammy for them since HDFC Bank was the sole issuer of Diners Club cards in India. Same for American Express, which won’t be able to issue new cards till further notice from May 1, 2021. And to think all of this was happening in the same timeframe when Citi decided to move out of India as well.
What do you think of RBI’s new move to disallow Diners Club and American Express from issuing new cards in India?
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