Fintech firms irked at RBI’s order to store payments data in India

Fintech firms irked at RBI’s order to store payments data in India
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New Delhi, Apr 20: Indian financial technology companies don’t seem to catch a breath. Even as firms operating in the financial space were coming to terms with know-your-customer norms, the Reserve Bank of India’s (RBI’s) directive to store all financial data in India has made them even more resentful of the regulatory environment in India.
The central bank wants the companies to provide “unfettered supervisory access” to their data on payments, customers and all transactions, according to its notification dated April 6, 2018, which asks them to store all data related to transactions in India alone.
While most banks in India store all this data on Indian servers in their core banking systems, the current directive addresses new-age payment and fintech companies operating in the space.
Some of the system providers do not store their payments data in India, the central bank observed.
However, payment companies aren’t entirely pleased with the proposal. Mobile application-based lending company CashE said even as it stored all their data in Mumbai, it had to move it from Singapore servers recently.
“We moved it locally but moving involves a lot of time, effort and cost. Since it’s a live platform, you have to operate servers on both locations at the same time, which is costly and at the same time, there is a cost of moving (data) itself,” said V Raman Kumar, chief executive officer (CEO), CashE.
Kumar said most companies these days preferred working with providers such as Amazon Web Services (AWS) instead of trying to build data farms, which is a costly exercise. Notably, AWS recently entered India with its data centres in Mumbai, and much of the data of Indian companies is still on its US and Singapore servers.
However, that is soon likely to change. It was only because of requests from multiple companies for having servers in the country that Amazon decided to set up shop in India, it said in a press release on its launch.
“These same 75,000 Indian customers, along with others anxious to start using AWS, have asked for an AWS India Region so they can move their applications that require low latency and data sovereignty,” said Andy Jassy, CEO of AWS.
Moving data from foreign servers to India is both a time-consuming and costly process. A live server has to run on both geographies to enable a smooth transfer of data and sometimes, the cost of storage runs pretty high, depending on data requirements. For instance, CashE has 1.8 billion call records and that’s just one of the dozens of indicators it collects for checking people’s loan eligibility.
It is in this context that companies are seeking more clarity from the RBI on what the proposal entails even as the central bank has given a deadline of six months to finish the process.
The three big card companies — Mastercard, Visa, and American Express — are learned to have conveyed their reservations to the RBI. They companies are likely to be the worst-affected because they process the bulk of the country’s digital transactions and their network processors are situated across the world to maintain peak loads.