Reserve Bank of India (RBI) had said in a statement that the ban on master card Will be effective from 22 June. The reason behind the ban of this card was said to be non-compliance with the local data storage guidelines. This big impact is going to be felt by at least five private banks as well as non-bank lenders and card issuers. According to the Nomura Research report, the banks most affected by this change are RBL Bank, Yes Bank and Bajaj Finserv. All credit-card plans that these lenders offer are covered under Mastercard.
According to the report, slightly further down the spectrum, Indusland Bank, ICICI Bank and Axis Bank will be the second most affected as around 35 to 40 per cent of their credit card schemes are linked to restricted cards. The exception to this category is HDFC Bank. Even though this lender has about 45 per cent of its credit card schemes under Mastercard, it will not feel as much impact, as it is already restricted from issuing new cards as a bank. Another major bank, State Bank of India (SBI), will also have to deal with this fall, albeit minimally. According to the report, only 10 per cent of the bank’s schemes come under the purview of Mastercard.
Another issue that has come to the fore in the light of this ban is the issue of co-branding. Co-branded credit cards linked to MasterCard will have to be discontinued. SBI, Axis Bank and RBL Bank, which all have co-branded credit cards, will have to revamp their card branding in a big way.
What are the effects on your debit and credit cards?
This change will not affect existing MasterCard cardholders in any way. Customers who are using MasterCard as debit or credit need not worry. RBI has made it clear that this change will not have any impact on existing cardholders and will be applicable only to subsequent banks and customers. All the services you are using can be continued on MasterCard. Although it is banned in the above mentioned institutions, as a payment system, the card is allowed to function within the country under the ‘Payment and Settlement Systems Act 2019’.
Having said that, the RBI has gone ahead and barred the issuance of debit cards, credit cards and even prepaid cards by banks to new customers. This order is effective from 22 July.
This isn’t the first time something like this has happened. Earlier, the RBI had barred American Express Banking Corp and Diners Club from adding any more new customers to their platforms with effect from May 1. The reason behind this was said to be similar to the reasoning behind Mastercard’s ban. RBI claimed that the entities are not complying with the instructions and guidelines on storage of payment system data. These stringent measures by RBI come in the light of 2018 mandate, in which the banking entity made it clear that all service providers will have to store and process data related to their respective payment systems which are in India only.
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