Indian Banks Sideline Crypto Companies Despite RBI Clarification

28 June 2021 | Updated: 28 June 2021

Several Indian banks continue to suspend offering services to customers dealing in cryptocurrencies, despite the Reserve Bank of India’s (RBI) memo that its crypto ban was no longer valid.

According to a recent report by Livemint, IDFC First Bank has joined the growing list of Indian commercial banks suspending their services to crypto-based companies. The report noted that:

“IDFC First Bank over the past week temporarily stopped services, as it is doing enhanced due diligence regarding banking support to crypto exchanges.”

The RBI recently clarified that financial institutions do not have to follow its April 2018 circular banning banks from rendering services to crypto-related businesses, noting that it was no longer valid and should not get cited or quoted. The apex bank added that banks could “continue to carry out customers due to diligence processes” in compliance with existing rules.

Other Indian Banks Distancing Themselves from Crypto

The Livemint publication also noted that other banks that have cut ties and distanced themselves from crypto-related companies include ICICI Bank, Yes Bank, and Paytm Payment Bank. Meanwhile, HDFC Bank and State Bank of India (SBI) have advised their customers against the risks in dealing with cryptocurrencies due to their unregulated nature.

However, Bitcoin and other cryptocurrencies are not banned in India, as confirmed by both the government and the RBI.

Nonetheless, the Indian government still plans on drafting a cryptocurrency bill, which should have gotten introduced during the budget session of parliament but was not. That said, there are talks of the government assembling an expert panel to reevaluate the recommendations in the current bill.

According to Livemint, the CEO and co-founder of Exchange Unocoin, Sathvik Vishwanath, said that “IDFC Bank joins a few of the other nationalized banks that have taken the stance [not] to service cryptocurrency-based companies.” The CEO added that:

“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.”

 

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Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.