The Reserve Bank of India (RBI) clarifies in a fresh circular that there is no banking ban on crypto in India. The RBI issued a notification that Banks can’t cite their 2018 circular in order to deny services against their customers who are dealing in cryptocurrencies. The RBI states “the order is no longer valid”
It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020 in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from. Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.Reserve Bank Of India
The RBI in its circular dated 16 April 2018 restricted banks and financial institutions from dealing in cryptocurrencies. The RBI asked banks to prohibit services to their customers and exchanges who are dealing in Cryptocurrencies. The circular on cryptocurrency was challenged in Supreme Court. On 4 March 2020, The Supreme Court Of India lifted all the restrictions on banks and financial institutions. They were now allowed to provide access of banking services to customers dealing in cryptocurrencies.
Recently, there were huge number of complains from crypto investors about getting warning letters from their banks for dealing in cryptocurrency. Also, currently many exchanges are facing INR withdrawal and deposit issues due to non-banking support. The news circular issued by the RBI cleared several confusion on cryptocurrencies and provided huge relief to crypto investors.