The Reserve Bank of India lifted restrictions imposed on Diners Club International with immediate effect over on-boarding of fresh domestic customers. Diners Club International is a payment system operator authorised to operate card networks in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).
The RBI order did not impact the existing customers of Diners Club International. In a statement today, the RBI said: “In view of the satisfactory compliance demonstrated by Diners Club International Ltd. with the Reserve Bank of India (RBI) circular dated April 6, 2018, on Storage of Payment System Data, the restrictions imposed, vide order dated April 23, 2021, on on-boarding of fresh domestic customers have been lifted with immediate effect.”
For the unversed, RBI had imposed restrictions on Diners Club International Ltd. from on-boarding new domestic customers onto its card network from May 1, 2021 for non-compliance with storage of payment system data regulations.
In an April 2018 circular, RBI had, “All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India. This data should include the full end-to-end transaction details/information collected/carried / processed as part of the message/payment instruction. For the foreign leg of the transaction, if any, the data can also be stored in the foreign country, if required.”
Meanwhile, in another order, RBI imposed a monetary penalty of Rs 5 lakh on The Nakodar Hindu Urban Co-operative Bank Ltd., Nakodar, Punjab (the bank) for non-compliance with certain directions issued by RBI contained in the Master Circular dated July 01, 2015, on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, said RBI.
The central bank informed that the inspection report of the bank based on its financial position as on March 31, 2019, revealed, inter alia, non-adherence with/violation of the aforesaid directions, viz., non-identification of NPAs, wrong classification of assets and inadequate provisions made due to wrong classification of assets.
Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for violation of the said directions. After considering the bank’s reply and oral submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-adherence with /violation of RBI directions were substantiated and warranted imposition of monetary penalty.
