The Reserve Bank said all data related to payments, including those processed abroad, must be stored only in India, notwithstanding concerns raised by American e-commerce and payment firms.
In case, the payment processing is done abroad, the data should be deleted from the systems there and brought back to India within 24 hours, the central bank said.
The clarifications, in the form of FAQs (Frequently Asked Questions), came on a day when U.S Secretary of State Mike Pompeo held talks with senior leaders during his India visit.
Several U.S giants like Google, Mastercard, Visa and Amazon operate in India and have raised concerns over data localisation and its impact on their operational cost.
"The entire payment data shall be stored in systems located only in India...," the RBI said.
The FAQs were issued after the Payment System Operators (PSOs) raised certain implementation issues regarding the central bank's April 2018 directive on 'Storage of Payment System Data'.
In April last year, the RBI had issued a directive on 'Storage of Payment System Data'.
It had advised all system providers to ensure that within a period of six months, the entire data relating to payment systems operated by them is stored in a system only in India, for effective monitoring.
The FAQs further said there is no bar on processing of payment transactions outside India if so desired by the PSOs.
However, the data shall be stored only in India after the processing. The complete end-to-end transaction details should be part of the data.
"In case the processing is done abroad, the data should be deleted from the systems abroad and brought back to India not later than the one business day or 24 hours from payment processing, whichever is earlier. The same should be stored only in India," it said.
However, any subsequent activity such as settlement processing after payment processing, if done outside India, should also be undertaken / performed on a near real time basis. The data should be stored only in India, it added.