RBI’s localization mandate: Cure without a problem?

The Reserve Bank of India (RBI), recently, issued clarifications to its 6 April 2018 directive on localization of payment data. The directive mandated payment system operators (PSO) to store their entire data relating to payment systems only in India.

The clarifications have come at a time when India has abstained from signing the Osaka Declaration on Digital Economy, or the Osaka track, which seeks to foster policy discussions on cross-border data flow at a global level.

Issued in the form of frequently asked questions (FAQs), the clarifications set out certain exceptions to the directive’s data localization mandate. They state that, 1) in case of payment data involving domestic and foreign components, a copy of the domestic component can be stored outside India, 2) payment transactions can be processed outside India, but payment data must be deleted from systems located outside India within one business day or 24 hours of the processing and the data must be stored only in India, and 3) activities undertaken following payment processing, such as settlement processing, must be done on a near real-time basis.

Lagna Panda is a senior associate at Chandhiok & Mahajan.

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