Indian Banks Halting Services to Crypto Industry Post RBI Clarification
Several Indian banks have reportedly halted services to customers dealing in cryptocurrencies despite the central bank, the Reserve Bank of India (RBI), informing them that the banning circular is no longer valid. The latest bank to join the fray is IDFC First Bank.
IDFC First Bank has become the latest bank to halt services to crypto companies, Livemint reported last week, citing industry sources. The publication conveyed:
IDFC First Bank over the past week temporality stopped services, as it is doing enhanced due diligence regarding banking support to crypto exchanges.
This followed the RBI clarifying to financial institutions that its April 2018 circular which banned banks from providing services to crypto businesses is no longer valid and should not be cited or quoted. The central bank added that banks may “continue to carry out customer due diligence processes” in compliance with existing regulations.
Other banks that have kept their distance from clients dealing in cryptocurrencies include ICICI Bank, Yes Bank, and Paytm Payments Bank, the publication noted.
HDFC Bank and State Bank of India (SBI) have also cautioned their users against the risks of dealing in cryptocurrencies, including bitcoin, due to them being unregulated.
However, bitcoin and other cryptocurrencies are not banned in India, both the government and the RBI have confirmed.
The Indian government is still working on a cryptocurrency bill. It was supposed to be introduced during the budget session of parliament but it was not. Now, there are reports of the government setting up an expert panel to re-examine the recommendations in the current bill, which seeks to ban all cryptocurrencies except the ones issued by the RBI.
“IDFC Bank joins a few of the other nationalized banks that have taken the stance to not service cryptocurrency-based companies,” Sathvik Vishwanath, CEO and co-founder of cryptocurrency exchange Unocoin, was quoted by Livement as saying. He added:
While RBI has clarified its stance that the banks can provide services after their due diligence, it is abruptly insane for these banks to take their foot back. These kinds of reactions also alarm the investors of cryptocurrencies for the wrong reason.