The Reserve Bank of India on Wednesday lifted the business restriction on American Express Banking Corp, allowing the US giant to onboard new customers in India after almost 16 months. The move came after the firm demonstrated “satisfactory compliance” with local data storage rules, the RBI said.
Restrictions on American Express cards
The Indian bank regulator last year indefinitely barred Mastercard, American Express, and Diners Club from issuing new debit, credit, or prepaid cards to customers due to noncompliance with local data storage rules with the RBI circular dated April 6, 2018, that was applicable from May 01, 2021. However, the businesses were allowed to continue to serve their existing customers in the country. Restrictions from Diners Club and Mastercard were removed in November 2021 and in June 2022 respectively.
“In view of the satisfactory compliance demonstrated by American Express Banking Corp with the Reserve Bank of India (RBI) circular… on Storage of Payment System Data, the restrictions imposed… on the onboarding of new domestic customers have been lifted with immediate effect,” the central bank said in a statement.
Amex welcomed RBI’s move saying it is the result of the company’s significant local investments in technology, infrastructure, and resources. Sanjay Khanna, Interim CEO and COO, American Express Banking Corp, said, “we welcome today’s decision by the Reserve Bank of India, which enables American Express Network to onboard new customers effective immediately.
India is a key strategic market for American Express, and today’s decision is the result of our significant local investments in technology, infrastructure, and resources.”
Back in April 2018, the central bank said it had observed that not all system providers stored payment data in India adding that such systems were also highly technology dependent, which necessitated the adoption of best-in-class safety and security measures on a continuous basis. There had been considerable growth in the payment ecosystem in the country, it said.
RBI said system providers must ensure that all data related to payment systems operated by them are stored in a system only in India.