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RBI lifts restriction on Mastercard, allows banks to issue new cards on the network

RBI allows Mastercard to on-board new customers, after the network showed compliance with data localisation norms.

What's the news? The Reserve Bank of India (RBI) on June 16 lifted the restriction imposed on Mastercard from onboarding new domestic customers, meaning banks can once again start issuing cards on the Mastercard network. Why was Mastercard barred? Mastercard was barred from onboarding new customers in July 2021 for failing to comply with RBI's data localisation norms issued in April 2018. The card network has now demonstrated satisfactory compliance, RBI said on Thursday. How did this hurt Mastercard's business? The restriction on Mastercard resulted in many banks shifting to Mastercard's arch-rival, Visa, including RBL Bank and Yes Bank, which used to solely rely on Mastercard. The issue also reportedly irked the US government and a senior US trade official termed the move “draconian.” A month after it was barred, Mastercard said that it complied with the local data storage norms and has filed a new audit report, but it's not clear why RBI took so long to remove the restrictions. It could take Mastercard a while to regain any market share it lost to Visa and home-grown RuPay, which has received significant support from the Indian government over the last couple of years. Who continues to be barred? Mastercard was not alone in being barred. Both American Express and DinersClub were barred in April 2021, but the restrictions on DinersClub were lifted in November 2021. AmericanExpress is now the only major card network that continues to be barred. The restrictions, however, do not affect existing customers of the card network. What are RBI's card localisation guidelines?  In April 2018, the…

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