Consider the following statements: The Reserve Bank of India's recent directives relating to 'Storag

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Question

Consider the following statements: The Reserve Bank of India's recent directives relating to 'Storage of Payment System Data', popularly known as data diktat, command the payment system providers that:they shall ensure that entire data relating to payment systems operated by them are stored in a system only in India.they shall ensure that the systems are owned and operated by public sector enterprises.they shall submit the consolidated system audit report to the Comptroller and Auditor General of India by the end of the calendar year.Which of the statements given above is/are correct?

Accepted Answer

Correct Answer: A — 1 onlyStep-by-step Solution:The RBI's Storage of Payment System Data directive (April 2018), popularly called the 'Data Diktat,' was a landmark data localisation directive for payment system operators (like Visa, Mastercard, PayPal, Google Pay, etc.).Statement 1 — Entire data must be stored in India only: This is correct. The directive mandated that all system providers (payment companies) shall ensure that the entire data relating to payment systems operated by them — including full end-to-end transaction details and all information collected/carried/processed as part of the message/payment instruction — be stored only in India. For the foreign leg of a cross-border transaction, data could also be stored abroad, but a copy must be in India. ✓Statement 2 — Systems must be owned and operated by public sector enterprises: This is incorrect. The RBI directive makes no mention of requiring payment systems to be owned or operated by public sector enterprises. It only requires data storage within India — private payment companies (Visa, Mastercard, Paytm, PhonePe, etc.) can continue to own and operate their systems. ✗Statement 3 — Audit report to be submitted to CAG: This is incorrect. The directive required system providers to submit a System Audit Report (SAR) — but to the Reserve Bank of India (not the Comptroller and Auditor General). The SAR was to be conducted by CERT-IN empanelled auditors and submitted to RBI by December 31, 2018. ✗Why other options are incorrect:Options B, C, and D: Incorrect because statements 2 and 3 are factually wrong.Key Concept: Data localisation debate: RBI's data localisation mandate (2018) was controversial — global payment companies (Visa, Mastercard, American Express) initially resisted, but eventually complied. The directive was aimed at: ensuring law enforcement access to payment data; protecting Indian consumers' financial data from foreign jurisdiction; enabling faster dispute resolution. India's Personal Data Protection Bill (now DPDPA 2023) further regulates data localisation for different categories of personal data.

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