With recent legal advancements, Indian banks are reluctant to provide financial services to crypto firms and investors due to a lack of clarification from the Reserve Bank of India (RBI). Banks have stated that any assistance on any cryptocurrency related services would be contingent on RBI rules.
In 2018, the RBI prohibited crypto businesses from receiving banking services, which was overturned by the Supreme Court in March 2020. However, some banks continue to refuse crypto transactions, claiming non-compliance concerns, impeding local acceptance. “Banks are not interested in participating right now since they do not have complete clarification from the RBI or the government,” said Bhagaban Behera, co-founder and CEO of local crypto exchange Defy.
Local exchanges anticipate that banks will remain cautious for the time being, and that those who do will continue to monitor transactions because exchanges presently lack the ability to report questionable transactions. “Banks have a risk-taking capacity because they don’t want a bad reputation for the firm if anything illegal happens tomorrow,” Vishwanath stated.
Shaktikanta Das, governor of RBI, warned the investors about the risks involved with cryptocurrencies, claiming that digital assets are “not even a tulip.” “Because banks in India are subject to stringent laws, the RBI must publish a circular or a directive advising banks on how to handle customer inquiries regarding cryptocurrency purchases and transactions,” said Pradeep Gooptu, a financial markets specialist. “Clearly, India’s 30% tax plan has outpaced the RBI’s and individual commercial banks’ readiness to deal in cryptocurrencies,” he added.
Exchanges and analysts anticipate rules in the event of a ban, but the timetable is unknown.