New Delhi, Sept. 19 (BNA): A senior US trade official has privately criticized India’s decision in July to ban MasterCard Inc. from issuing new cards, calling it an “extremely draconian” move that caused “panic”.
The documents show frustration within the US government after India’s central bank banned the issuance of new cards by American Express and Diners Club International in April, and then took similar action against MasterCard in July, according to US government emails, Reuters reported.
The Reserve Bank of India accuses the companies of breaching local data storage rules. The ban does not affect existing customers.
The ban on Mastercard – a major payment network in India along with Visa – sparked a flurry of emails between US officials in Washington and India as they discussed next steps with Mastercard, including approaching the RBI, government emails show.
Lynch, Deputy Assistant US Trade Representative for South and Central Asia, wrote on July 16, two days later: “We are starting to hear from stakeholders about some of the drastic measures the Reserve Bank of India has taken over the past two days.” MasterCard Announcement.
“It appears that some others (Amex and diners) may have been affected by similar actions recently,” Lynch wrote, asking colleagues in India to contact the central bank’s contacts.
Lynch, spokesmen for the Office of the United States Trade Representative and the US Embassy in New Delhi did not respond to requests for comment. The US government has not publicly commented on Mastercard’s ban.
The Reserve Bank of India did not immediately respond.
“We’ve had a very constructive engagement with the Indian and US governments over the past few weeks and appreciate their support,” a MasterCard spokesperson told Reuters. He said this includes discussions with the Reserve Bank of India, and that Mastercard “has made good progress” as it looks to resolve the situation quickly.
MasterCard considers India as a major growth market. In 2019, she said she was “optimistic about India,” a country where she has placed big investment bets and established research and technology hubs.
The MasterCard ban has alarmed the company and rattled India’s financial sector as partner Indian banks fear a hit to their income as they struggle to partner quickly with new card delivery networks.
The Reserve Bank of India (RBI) acted against MasterCard because it “was found to be incompatible” with 2018 rules despite “a significant amount of time and sufficient opportunities”.
The rules, which require foreign card networks to store Indian payments data locally for “unrestricted supervisory access”, were implemented after lobbying efforts by US companies soured trade ties between New Delhi and Washington.
Mastercard said it was “disappointed” with the decision. The company told Reuters it had submitted an additional audit report to the Reserve Bank of India before the ban took effect on July 22.
US government emails show there is hope that things will be settled before then.
In one, Lynch told colleagues the concept was that “the Reserve Bank of India has the information they need and they hope to respond appropriately.” But as the ban approached, he wrote, “If the RBI does not change course, I am sure panic will resume.”
Days later, he wrote that Mastercard continues to “publish the entire court press” in Washington.