UPSC Prelims 2019 Q87: Indian Economy – Digital Payments & Financial Inclusion

UPSC Prelims 2019, General Studies Paper I · Indian Economy

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 1. They shall ensure that entire data relating to payment systems operated by them are stored in a system only in India. 2. They shall ensure that the systems are owned and operated by public sector enterprises. 3. 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?

(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3

Answer: (a) 1 only

Explanation

RBI's 'Data Diktat' (2018) - Storage of Payment System Data

Statement	Claim	Verdict	Detail
1	Entire payment system data must be stored in India	TRUE	RBI's 6 April 2018 directive requires all system providers to ensure that entire payment-related data is stored in a system only in India (data localisation).
2	Systems must be owned by public sector enterprises	FALSE	RBI does NOT require PSU ownership - private, foreign and public entities can operate payment systems provided data is localised.
3	Audit report to be submitted to CAG	FALSE	System audit report to be submitted to RBI (not CAG) by end of the specified period.

Only statement 1 is correct. Answer: (a) 1 only.

Answer: (a) 1 only.

Why each option is right or wrong

(a) CORRECT. RBI's data diktat mandates data localisation (S1). It does not require PSU ownership (S2 wrong) or CAG audit (S3 wrong - audit report goes to RBI).
(b) Incorrect. Statement 2 is wrong - no PSU ownership requirement.
(c) Incorrect. Statement 3 is wrong - audit report to RBI, not CAG.
(d) Incorrect. Statements 2 and 3 are wrong.

Key point

RBI data localisation (2018): Payment system data must be stored in India only. No PSU-ownership mandate. Audit report to RBI (not CAG).

Remember

Only statement 1 is correct. RBI's 2018 'data diktat' requires that the entire data relating to payment systems be stored in a system only in India (strict data localisation). It does NOT require public-sector ownership of the system, nor does it direct audit reports to the CAG - audit reports go to RBI.

Common mistakes

Confusing PSU ownership with data localisation - RBI mandates data location, not ownership structure.
Assuming CAG audits private payment systems - CAG audits govt accounts; RBI supervises payment systems.
Not knowing this directive triggered Visa/Mastercard/Amex/WhatsApp Pay to establish India-only data storage.

Exam tip

RBI's data localisation vs PDP Bill: RBI's directive (2018) = strict data-only-in-India for payments. Personal Data Protection Bill / DPDP Act 2023 = broader personal data framework with categories of data localisation for sensitive/critical data.

Sources

RBI Circular - Storage of Payment System Data (6 April 2018)
RBI FAQ - Data localisation for payment systems

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