Know how RBI's data localisation norms will impact you

New Delhi: In April this year, Reserve Bank of India's (RBI) gave six months time to global payment companies to store transaction data of Indian customers within India.

The move is part of a wider push by Indian government for protecting user data.  

As per PTI sources, the RBI will not relax the October 15 (Monday) deadline for global financial technology (fintech) companies to comply with its data localisation norms in the  public interest.

However, the US wants to prohibit data localisation to ensure free flow of information across borders.

Data localisation requires data about residents be collected, processed, and stored inside the country, often before being transferred internationally, and usually transferred only after meeting local privacy or data protection laws.

Although domestic companies have welcomed the guidelines, global companies fear increase in their expenses for creation of local servers.

To avoid this rise in cost, global companies in recent meeting with the RBI proposed to provide mirror data instead of original data to which the central bank did not agree. Firms such as Mastercard, Visa and American Express have repeatedly sought dilution of the RBI directive, requesting that they be allowed to store data both locally and at their offshore offices, a practice widely known as ‘data mirroring’, a Reuters report has said.

The RBI in April said in order to ensure better monitoring of payment service operators it is important to have unfettered supervisory access to data stored with these system providers as also with their service providers/ intermediaries/third party vendors and other entities in the payment ecosystem.

All system providers shall ensure that the entire data relating to payment systems operated by them are stored in a system only in India, it had said.

The RBI further said data should include the full end-to-end transaction details, information collected/carried/ processed as part of the message/payment instruction.

With Agency Inputs