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Home / Business / US trade official calls India's ban on Mastercard 'draconian' move

US trade official calls India's ban on Mastercard 'draconian' move

Internal united states government emails show frustration after the prohibition

Reuters   |   New Delhi   |   Published 20.09.21, 02:01 AM

A senior US trade official privately criticised India’s July decision to ban Mastercard Inc from issuing new cards, calling it a “draconian” move that caused “panic”, according to US government emails seen by Reuters.

The documents show frustration within the US government after India’s central bank banned new card issuance by American Express and Diners Club International in April, then took similar action against Mastercard in July.

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The Reserve Bank of India accuses the companies of breaking local data storage rules. The bans do not affect existing customers.

The ban on Mastercard  a top payment network in India alongside Visa  triggered a flurry of emails between US officials in Washington and India as they discussed next steps with Mastercard, including approaching the RBI, the government emails show.

“We’ve started hearing from stakeholders about some pretty draconian measures that the RBI has taken over the past couple days,” Brendan A. Lynch, the deputy assistant US trade representative for South and Central Asia, wrote on July 16, two days after the Mastercard announcement.

“It sounds like some others (Amex, Diners) may have been impacted by similar actions recently,” wrote Lynch, asking his colleagues in India to get in touch with their central bank contacts “to see what’s going on”.

Lynch, spokesperson for the Office of the US Trade Representative and the US Embassy in New Delhi did not respond to requests for comment. The US government has not publicly commented on the Mastercard ban.

The RBI did not immediately respond.

A Mastercard spokesperson told Reuters, “We’ve had very constructive engagements with the Indian and U.S. governments over the past few weeks and appreciate the support of both.” This includes discussions with the RBI, and Mastercard has “made good progress” as it looks to resolve the situation quickly, he said.

Mastercard counts India as a key growth market. In 2019, it had said it was “bullish on India”. The Mastercard ban rattled the company and upset India’s financial sector as Indian partner banks fear a hit to their income as they struggle to swiftly partner new networks to offer cards.



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