EXCLUSIVE US trade official called India’s Mastercard ban “draconian” email

In this illustration from July 15, 2021, a smartphone with the Mastercard logo can be seen in front of the displayed stock chart. REUTERS / Dado Ruvic / Illustration / File Photo

  • US government internal emails show frustration following the Mastercard ban
  • US trade officials privately criticized the Indian central bank
  • Mastercard ban on issuing new cards scared Indian banks

NEW DELHI, Sep 19 (Reuters) – A senior US trade official privately criticized India’s July decision to ban Mastercard Inc. (MAN) from issuing new cards, calling it a “draconian” move that caused “panic,” according to Reuters emails from the US government.

The documents show frustration within the US government according to India’s central bank forbidden new card issuance from American Express (AXP.N) and Diners Club International in April, then similar action against MasterCard in July.

The Reserve Bank of India accuses the company of violating local data retention regulations. Existing customers are not affected by the prohibitions.

The Mastercard ban – a top payment network in India alongside Visa (VN) – sparked a spate of emails between US officials in Washington and India as they discussed next steps with Mastercard, including moving closer to the RBI, the government emails show.

“We have started hearing from stakeholders about some of the rather draconian measures the RBI has taken in the past few days,” wrote Brendan A. Lynch, the US deputy assistant trade officer for South and Central Asia, on July 16, two Days later the Mastercard announcement.

“It sounds like some others (Amex, Diners) have been hit by similar measures lately,” Lynch wrote, asking his colleagues in India to get in touch with their central bank contacts “to see what is going”.

Lynch, spokesman for the US Trade Representative’s office 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 respond immediately.

A Mastercard spokesman told Reuters: “We have had very constructive talks with the Indian and US governments over the past few weeks and we appreciate the support of both.” This includes talks with the RBI, and Mastercard has “made good progress” in resolving the situation quickly, he said.


Mastercard counts India as an important growth market. In 2019, it said it was “looking up on India,” a country where it has made big investment bets and built research and technology centers.

The Mastercard ban rattled the company and upset India’s financial sector as Indian partner banks fear loss of income as they struggle to quickly partner with new networks to offer cards.

The RBI took action against Mastercard because it was found to be “non-compliant” with the 2018 rules despite the “passage of a considerable amount of time and reasonable opportunities”.

The rules requiring foreign card networks to store Indian payment details locally to allow “unrestricted regulatory access” were implemented after failed lobbying efforts by US firms also affected trade relations between New Delhi and Washington.

Mastercard was “disappointed” with the decision. The company has told Reuters that there will be an additional report to the RBI before the ban comes into force on July 22nd.

The U.S. government emails show that there was hope that things could be cleared up beforehand.

In one, Lynch told his colleagues that “RBI has the information they need and hopes they will respond appropriately”. But as the ban approached, “if the RBI doesn’t change course, I’m sure the panic will resume,” he wrote.

Days later, he wrote that Mastercard would continue to “open the full court press” in Washington.

Reporting from Aditya Kalra in New Delhi; Adaptation by William Mallard

Our standards: The Thomson Reuters Trust Principles.


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