Reserve Bank of India (RBI) has banned credit card companies American Express and Diners Club International from onboarding new domestic customers onto their card networks from May 1, 2021. The action has been taken as these entities have been found non-compliant with the directions on storage of payment system data which the central bank had asked them to store in India, RBI said.

“In terms of RBI circular on storage of payment system data dated, all payment system providers were directed to ensure that within a period of six months the entire data relating to payment systems operated by them is stored in a system only in India. They were also required to report compliance to RBI and submit a board-approved system audit report conducted by a CERT-In impanelled auditor within the timelines specified therein,” RBI said. American Express had 1.56 million credit cards outstanding in India as of February the second-highest among foreign lenders in India behind Citibank.

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“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,” American Express said in a statement.