Payments data must be stored in systems located in India, says RBI

The Reserve Bank of India (RBI) has said all data related to payment transactions must be stored in the country and that such information, if processed abroad, will have to be brought back within 24 hours.

“The entire payment data shall be stored in systems located only in India,” the RBI said in its frequently asked question (FAQ) section on Wednesday, responding to certain issues raised by payment system operators. “The data should be deleted from the systems abroad and brought back to India not later than one business day or 24 hours from the payment processing, whichever is earlier,” it added.

The clarification has come a week after the government said the RBI would examine concerns around its strict data-localisation guidelines.

Payment providers have been lobbying at various levels for free flow of data across borders in order to ensure that customer benefits and fraud analysis are not affected.

While the government has been pushing for softer data-localisation guidelines by allowing data mirroring, the RBI has held its ground, maintaining that India's payments data can only be stored locally.

The central bank has also said the data stored in India can be accessed or fetched whenever required for handling customer disputes as well as for any other related processing activity, such as chargeback. The data may be shared with the overseas regulator, if so required, depending upon the nature/origin of a transaction with due approval of the RBI, it added. The RBI allows a copy to be stored abroad in case of cross-border transactions.

The clarity on data processing outside India may come as a relief to global payment firms, but the RBI’s reiteration on exclusive storage poses a problem. The representative of a leading international payments provider had told Business Standard earlier that the company needed to change some of its global processes to ensure that none of the payments data of Indian customers was stored elsewhere while processing globally. He had said that most of the other players would need to follow a similar process and called it a‘work-in-progress’.

The RBI had released data-localisation guidelines on April 6, 2018, and gave payments providers six months for complying with the norms. Despite excessive lobbying by these players, the RBI remained firm on its guidelines and nearly all payments providers submitted a compliance plan and report to the regulator when the deadline approached. Majority of payment players have complied with the data storage norm.