RBI Delays Plans To Launch New Payment Network

India’s central bank, the Reserve Bank of India (RBI), has announced it will put a new payment network plan on hold, Mint reported Wednesday (Aug. 25).

Citing data safety concerns, the regulator delayed the plan, which would have allowed new entities to create digital payment platforms “and end the National Payments Council of India’s (NPCI) dominance in online transactions,” according to the report.

“RBI feels the issue of data security involving foreign entities remains a key concern and, therefore, has decided to not go ahead with the new licenses for now,” an unnamed source reportedly told Mint.

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The hold is unfortunate news for corporations like Amazon, Google, Facebook and the Tata group, which had applied for the new umbrella entities (NUEs) licenses under the new plan in partnership with companies like Reliance Industries and ICICI Bank, the report stated.

Government-run lenders and shareholders of the National Payments Council of India (NPCI), including State Bank of India and Union Bank, were prevented by the finance ministry from applying for licenses, according to the report. Together with bank unions like the UNI Global Union, they expressed their displeasure at the exclusion, particularly given that foreign entities were allowed to set up payment networks in India, the report stated.

“Banks didn’t want to be left out,” an unnamed source reportedly told Mint. “Due to pressure from the government, banks are pushing that NUE without state-run banks is not something they would be happy with. There is a lot of work going on behind the scenes.”

RBI’s Mastercard ban in July for non-compliance with data storage regulations could be linked to the central bank’s decision to review the NUE proposals and delay payment transactions managed by the private sector.

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As PYMNTS reported, Mastercard is not the only global payments firm that has been targeted in India, as American Express and Diners Club were also previously banned from onboarding new clients onto their card networks due to non-compliance with India’s data localization norms.