India has lifted business restrictions on American Express, once again permitting the U.S. giant to onboard new customers in the South Asian market after the firm demonstrated “satisfactory compliance” with local data storage rules, the local central bank said Wednesday.
In a series of moves last year, the Reserve Bank of India indefinitely barred Mastercard, American Express and Diners Club from issuing new debit, credit or prepaid cards to customers over noncompliance with local data storage rules (PDF). The business restriction allowed the firms to continue to serve their existing customers in the country. India lifted the ban on Mastercard in June this year.
“In view of the satisfactory compliance demonstrated by American Express Banking Corp with the Reserve Bank of India (RBI) circular… on Storage of Payment System Data, the restrictions imposed… on onboarding of new domestic customers have been lifted with immediate effect,” the central bank said in a statement.
Unveiled in 2018, the local data-storage rules require payments firms to store all Indian transaction data within servers in the country. Visa, Mastercard and several other firms, as well as the U.S. government, previously requested New Delhi to reconsider its rules, which they argued were designed to allow the regulator “unfettered supervisory access.”
“We welcome today’s decision by the Reserve Bank of India, which enables American Express Network to onboard new customers effective immediately. India is a key strategic market for American Express and today’s decision is the result of our significant local investments in technology, infrastructure, and resources,” said Sanjay Khanna, Interim CEO and COO of American Express in India, in a statement.
“American Express’ ability to deliver best in class value and customer experiences will enable us to meet the increasing demand for premium products and services and grow our business in India.”
The resumption of American Express’ business in India should provide a boost to the local banks and fintechs that for the last year and a half have been able to largely offer customers debit and credit cards powered by Visa and Rupay, a homegrown card network that is promoted by the National Payments Corporation of India, a special body of RBI.
The business restriction on the global cards giants took many banks by surprise last year. RBL Bank, for instance, scrambled to transition to Visa and took weeks to complete the process.