Despite pressure from the United States, the Modi government went ahead with the MasterCard ban in July and still upholds the same. India has barred American financial services giant MasterCard from adding new customers from the country. MasterCard is a major financial services company but its reluctance to comply with Indian regulations has led the Indian government to stop the growth of the multinational company in India.
The same thing happened with Twitter Inc. Twitter has fought many battles to retain its monopoly. It has censored right-wing political voices, it has fought against governments around the world, it has even banned former US President Donald Trump, removed the blue-tick of prominent government officials and ministers in the Modi government. But it soon became too high in power that Jack Dorsey and his people in Twitter began to think that they were themselves judges and juries and the only investigative body, the omniscient ignorant Messiah of freedom of speech and the unelected government of the people. But now the drunken stupor of Twitter has been slapped directly. The Modi government has taken out all the big guns and now Twitter is on its knees begging for a second chance.
India is one of the major and fast-growing financial markets. In a country like India where digital transactions have multiplied since November 2016, following the massive demonetization exercise introduced by Prime Minister Narendra Modi. Financial services companies hoped to make it bigger. MasterCard could have achieved a lot if it had followed Indian rules. Ever since the United States started a tirade against India, it has criticized the Modi government by calling MasterCard’s barring “Discriminatory and Trade Distortive”. However, the Modi government did not really pay much attention to Washington’s criticism, which is why the United States has now taken its case to the media.
After two months of intense lobbying to overturn the Indian government’s decision, the United States has now resorted to complaining to the media. Speaking to Reuters, a senior US trade official criticized India’s July decision to ban MasterCard Inc. from issuing new cards as a “Draconian move that caused panic.” “We are beginning to hear from stakeholders about some of the drastic steps that the RBI has taken over the past few days,” said the Deputy Assistant Secretary of State for South and Central Asian Affairs. Alexander Slater, deputy managing director of the US India Business Council, which advocates for American business interests, said “the free flow of information across the border is the foundation of a strong strategic and economic relationship between the United States and India.”
According to estimates, MasterCard accounts for one-third of the card market in India. The ban on MasterCard sparked an email spree between US officials in Washington and India as they discussed the future of MasterCard in India, including approaching the RBI. The US officials in Washington have asked their colleagues in India to contact the RBI to resolve the issue. However, Washington’s pressure strategy did not work. Before the MasterCard ban, the Reserve Bank of India took similar action against American Express and Diners Club in April too.
India has made it clear that if foreign companies want to do business in India, they must abide by reasonable rules in the country. The least they should do, to do business in one of the largest and widest markets in the world. The RBI acted against MasterCard because it was not complying with the 2018 rules despite being given enough time and ample opportunity. According to an Indian executive, the rule of data localization is very clear for a very long time. In an order dated July 14, RBI imposed a ban on MasterCard Asia Pacific Limited from onboarding new domestic customers onto its network from July 22 2021.
Despite the significant time and ample opportunities, the entity has been proven to be inconsistent with the payment system’s data protection guidelines. In 2018, India banned financial groups from storing data abroad. Under the new rules, all financial data generated from India but processed abroad should be destroyed within 24 hours and stored only in India. Companies must submit third-party audits, which the RBI deems necessary to prevent money laundering and other illegal activities. However, the non-compliant companies argue that the rules are costly, counterproductive and encouraged other countries to take similar action.
Under the leadership of Prime Minister Narendra Modi, India is doing what was needed to be done long ago. Company service information and all transactions in the country must be stored locally. This will help the RBI to track money laundering and take notes of suspicious transactions at relative ease. But the American giants are more inclined to insult India’s pragmatic rules rather than complying with them. The Modi administration stands tall and pays no attention to the intense lobbying of such companies and the indirect threats from the US government and ensures that those who do not follow the rules, will be punished.
