RBI: Banks Can’t Cite 2018 Circular to Deny Services to Customers Dealing With Crypto

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In Brief
  • The Reserve Bank of India has issued a notification to banks on dealing with crypto.

  • Some banks and other financial institutions still caution their customers regarding dealings with cryptocurrency

  • Though crypto is not yet termed illegal, its ban has been listed and still under consideration.

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The Reserve Bank of India has issued a notification to banks on how to relate with their customers who deal with cryptocurrencies.

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This notification, which was addressed to cooperative, payment, finance banks, and payment providers, states that these institutions should not make reference to the order of its circular of April 6, 2018, which it considered invalid from March 4, 2020.

According to a report received by the apex bank of India, some banks and other financial institutions still caution their customers regarding dealings with cryptocurrency in reference to the RBI circular issued on April 6. Some of these banks have proposed to restrict the customers if they are found dealing in cryptocurrency. 

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The RBI in its notification dated May 31, clarified that the circular is no longer valid, and stated that banks should not cite it as a reason for restricting customers from services because of their dealing in cryptocurrency.

The RBI urged banks and other payment service providers to continue rendering services to customers as they deserve and continue their due diligence based on other regulations, such as Know Your Customer, Anti-Money Laundering, Combating of Financing of Terrorism, and Prevention of Money Laundering Act, PMTA.

Most banks handle crypto-related issues as a hot issue due to the position of Indian government on the business of digital assets. Though crypto is not yet termed illegal, its ban has been listed and still under consideration.

The future of India’s cryptocurrency situation will be determined by the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. India’s Parliament had scheduled the legislation for its budget session in March, but got deferred for reasons not made public.

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