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MasterCard has been indefinitely barred from issuing new debit or credit cards to domestic customers in India.

The Reserve Bank of India (RBI) has accused MasterCard of violating data storage laws.

India’s central bank said MasterCard had not complied with rules requiring foreign card networks to store data on Indian payments exclusively in India.

There has been no response from the global payments service provider.

The payments service provider will be prohibited from issuing debit, credit or prepaid cards to customers in India from July 22.

The RBI’s decision will not have any impact on MasterCard’s existing customers. 

The bank said MasterCard had violated a 2018 order directing payments data to be stored in India. This would allow the regulator “unfettered supervisory access” to payment details.

“Notwithstanding (the) lapse of considerable time and adequate opportunities being given, the entity (MasterCard) has been found to be non-compliant with the directions of Storage Payment System Data,” the RBI said in a notification.

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In 2020, MasterCard accounted for 33% of all card payments in India, according to London-based payments start-up PPRO quoted by AFP.

In 2019, MasterCard announced an investment of a billion dollars over the next five years as part of its expansion plans in India.

Earlier this year, American Express and Diners Club were blocked from issuing new cards due to similar violations.

US-based payment service providers have lobbied aggressively against the 2018 directive, saying such a move would increase their costs of doing business in India.

However, India’s central bank has not relented.

The Indian rupee has hit a new all-time record low against the US dollar, amid concerns the Federal Reserve will soon scale back its stimulus measures.

It dropped to 64.13 against the US dollar in early trade on Tuesday.

Foreign investors have been pulling money out of India, as the economy has slowed and the cost of borrowing in dollars has risen.

The Reserve Bank of India (RBI) is rumored to have intervened to stem the slide in the currency.

The Indian rupee has declined by nearly 16% against the US dollar since May and is Asia’s worst performing currency so far this year.

Its further decline on Tuesday was mirrored by falls in markets across other developing markets, particularly in Asia.

On Tuesday, Japan’s Nikkei 225 index fell by 2.6%, Hong Kong’s Hang Seng was down 2.2% and South Korea’s Kospi dropped by 1.6%.

The Indonesian stock market fell 4.9% on Tuesday, pushing it into a formal bear market – meaning it has fallen by more than 20% since its last peak.

Minutes from the Federal Reserve’s latest meeting are due to be published on Wednesday, and may set out more details about the rollback of its “quantitative easing” stimulus programme.

The Indian rupee has hit a new all-time record low against the US dollar, amid concerns the Fed will soon scale back its stimulus measures

The Indian rupee has hit a new all-time record low against the US dollar, amid concerns the Fed will soon scale back its stimulus measures

The Fed is expected to start slowing the rate of its purchases of government debts with newly-created money from next month.

Another source of concern in India is the country’s widening current account deficit.

The current account deficit is a broader measure than the trade deficit, and includes cross-border income flows on investments.

As well as weakening the currency, the deficit can also act as a drain on the central bank’s foreign currency reserves, and suggests that the Indian economy as a whole needs to borrow more money from abroad.

Meanwhile, the Indian government has been attempting to stem the tide of investor money leaving the country by imposing capital controls.

The combination of all these factors has sparked comparisons to the financial crisis that India faced in 1991. In July that year, the rupee eventually fell by more than 32% against the US dollar after foreign exchange reserves were depleted.

On that occasion, the country had to be rescued by the International Monetary Fund (IMF).

“Weakness concentrated in the Brazilian real and Indian rupee makes sense, as these are current account deficit economies with limited ability to defend their currencies,” said Bank of Singapore’s chief economist Richard Jerram.

“India is in worse shape than Brazil, with few viable policy responses.

“Capital controls in India are not likely to have much impact and there is the risk that a [credit] ratings agency downgrade leads to further currency weakness.”

Over the weekend, Indian PM Manmohan Singh tried to calm fears that India was facing another currency crisis.

Manmohan Singh said that back in 1991, the country only had enough foreign currency reserves to cover the country’s borrowing needs for 15 days, while currently it has reserves equivalent to six to seven months.

“So there is no comparison. And no question of going back to [the] 1991 crisis,” Manmohan Singh told the Press Trust of India.

International investors have withdrawn $11.58 billion in shares and debt from India’s markets since the beginning of June, according to official data.

India, which is Asia’s third-largest economy, grew at an annual rate of 5% in the 2012-13 financial year, the slowest pace in 10 years.

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India’s rupee has hit a record low against the dollar despite recent efforts to prop-up the currency.

On Wednesday India’s central bank put further restrictions on the amount of money that companies and individuals can send out of the country.

That had little impact and the rupee fell to 62.03 to the dollar, below its previous low of 61.80 hit on August 6.

Rupee has hit a record low against the dollar despite recent efforts to prop-up the currency

Rupee has hit a record low against the dollar despite recent efforts to prop-up the currency

Overseas investors have been pulling money out of Indian shares and debt on concerns over the economy.

According to official data, international investors withdrawn $11.58 billion in shares and debt from India’s markets since the beginning of June.

India’s economy had been growing at a fast clip, reaching annual growth of 9%.

In recent months, it has seen a sharp decline largely because of a slowdown in its manufacturing and services sectors.

“There is a complete lack of faith in the markets. There are fears that the RBI [Reserve Bank of India] measures may not help improve the rupee,” said Param Sarma, chief executive with NSP Forex.

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