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RBI has also categorically denied granting permission to WhatsApp to go live for full-scale operations on the Unified Payments Interface (UPI) system.
An affidavit filed by the Reserve Bank of India (RBI) before the Supreme Court states that it has been informed by the National Payments Corporation of India (NPCI) that WhatsApp has complied with all the norms related to storage of data by payment systems, with respect to its proposed WhatsApp Pay service.
The RBI says that it had earlier advised NPCI to ensure that WhatsApp was complying with all the norms and regulations governing payment systems, and that its continuous taking up of the issue with NPCI has led to compliance from WhatsApp.
The affidavit filed on July 27 states,
However, RBI has also categorically denied granting permission to WhatsApp to go live for full-scale operations on the Unified Payments Interface (UPI) system.
The affidavit filed on July 27 states,
“It is specifically denied that RBI has granted permission to WhatsApp to go live for full scale operations on Unified Payments Interface (UPI) payment system.”
The RBI admits that the NPCI had communicated to it the System Audit Report (SAR) and the Post Change Review Report sent to it by WhatsApp. These reports touched upon details concerning the companie's compliance with a 2018 circular on Storage of Payment System Data.
The Supreme Court is told that after these reports were perused by the RBI, it apprehended that WhatsApp was still storing some of the relevant data outside of India beyond the permitted timelines allowed under theRBI the circular. The affidavit states,
RBI affidavit filed in Supreme Court
With this in view, the RBI had advised the NPCI in November 2019 to ensure that WhatsApp was complying with these requirements, and that the data is not stored by WhatsApp outside of India beyond the permissible time limit.
Moreover, the RBI says that it had advised NPCI to not allow WhatsApp to go live with its payment service till the time all the requisite norms were complied with. RBI had identified five items of non-compliance on the part of WhatsApp. Two of these had been resolved, NPCI had informed the RBI earlier this year.
As regards the remaining three issues, NPCI had communicated to the RBI that it would work closely with WhatsApp for resolution of the same by May 31, 2020.
Subsequently, in June this year, NPCI informed RBI that it had reviewed the Post Change Review Report from the auditors of WhatsApp that certified the compliance of the service with remaining three items also. As such NPCI was granting permission to ICICI Bank for "go live" of WhatsApp on UPI.
RBI’s affidavit says that it regularly took up the issue with NPCI in order to ensure expeditious compliance with its circular of 2018 and the same has resulted in compliance from WhatsApp.
WhatsApp, on two occasions, had submitted before the Supreme Court that it would not roll out its payment service without full compliance with the norms.
The Facebook-owned company had made these assurances before the Court during hearings in a plea seeking a ban on its payment service, for not being in line with data localization norms.
A petition by the think tank CASC had sought for a bar on WhatsApp's payment service till compliance of data localization norms. Another petition filed by NGO Good Governance said that WhatsApp's existing model for its payments service, which is embedded within the messaging app itself, should be declared inconsistent with the UPI Scheme, given that a "separate dedicated app" is not offered by the messaging service company.
An application has also been filed in the Supreme Court seeking a complete stoppage of the trials being conducted by WhatsApp Pay alleging that the company has been continuing beta testing on its payments system on 1 million users in violation of data localization norms in India.
Corrigendum: An earlier version of the story inadvertently missed the communication exchanged between NPCI and RBI regarding complete compliance of norms by WhatsApp. The error is regretted.
Read RBI's Affidavit: