The Reserve Bank of India (RBI) has lifted the ban imposed on Diners Club International from onboarding new customers, prompting Mastercard and American Express to be hopeful of getting a similar clearance from the regulator soon.

Diners Club International, which got the red flag from the RBI for flouting data storage norms, has been found to have complied with the stipulated rules.

The credit card business had turned in favour of Visa and allowed space for homegrown payment network RuPay to grow. With the major player Mastercard being crippled, several banks like Yes Bank and Federal Bank have already made the shift to Visa. As Diners Club International is a minor player in the Indian card networks market, the return of Mastercard in onboarding new customers can only stop Visa from having a near-monopoly run.   

“In view of the satisfactory compliance demonstrated by Diners Club International Ltd. with the Reserve Bank of India (RBI) circular dated April 6, 2018 on Storage of Payment System Data, the restrictions imposed, vide order dated April 23, 2021, on on-boarding of fresh domestic customers have been lifted with immediate effect,” the RBI said in a statement. The existing customers of Diners Club International were not impacted.

While the RBI had imposed restrictions on New York-headquartered American Express and Illinois-based Diners Club International from sourcing new domestic customers onto its card network from May 1, 2021 for non-compliance with the local-data storage rules, Mastercard faced the axe on July 22. 

In April 2018, the RBI made it mandatory for all foreign payments operators to store card and customer-related data on servers exclusively in India so that the regulator can have ‘unfettered supervisory access’ to transaction details. They could transfer this data for smoothing the flow, but it had to be deleted within 24 hours.

As per the rules introduced in March, all payment system operators from FY22 were mandated to submit detailed “compliance certificates” to the central bank twice a year signed by the respective chief executives or managing director.

Mastercard and American Express have been updating the central bank on their compliance levels. They now hope the RBI to soon lift the restrictions on them as well.