The banks also warned customers that failure to adhere to the advisory may lead to the cancellation of their cards or the transactions would be restricted without any further notice
Leading Indian lenders HDFC Bank and the State Bank of India have cautioned their customers against dealing in virtual currencies such as bitcoin, according to emails sent by the lenders. These emails sent to certain clients inquire about their virtual currency transactions and advice against such transactions. The banks also warned customers that failure to adhere to the advisory may lead to cancellation or suspension of their cards.
In its letter to customers, HDFC Bank said that virtual currency transactions are not permitted as per the Reserve Bank of India (RBI) guidelines. In its email, the lender has cited RBI’s circular DBR.No.BP.BC.104 /08.13.102/2017-18 dated 6 April 2018, under which the banks were advised to exercise due diligence by closely examining the transactions carried out in the account on an ongoing basis.
However, this circular was quashed by the Supreme Court of India in March last year.
Reportedly, RBI earlier this month had informally asked banks to stay away from businesses dealing in cryptocurrencies. ICICI Bank, Yes Bank, and Paytm Payments Bank are among the prominent names to sever ties with the sector.
In its emails to customers, SBI said, “Reserve Bank of India has not given any license or authorization to entities regulated by them to operate in cryptocurrency schemes or any other form of virtual currencies such as bitcoin."
SBI also advised its card customer to be mindful of potential economic, financial, operational, legal, customer protection and security-related risks associated with dealing with cryptocurrencies and virtual currencies.
Emails sent to HDFC Bank and SBI requesting comments remained unanswered.
While HDFC Bank has requested customers who have received the email to visit the nearest bank branch within 30 days to clarify the nature of these transactions, SBI has warned its clients that the usage of its credit card for transactions on virtual currency, merchant platforms may lead to suspension or cancellation of their SBI credit card.
HDFC added that in case they don’t hear from the customer within the 30-day period, they will restrict transactions to the customer’s account without any further notice.
“Investors from across the globe have invested millions of dollars in Indian crypto startups already. Around 10 million people in India are actively investing in digital currencies. In a situation like this if any unwelcomed step is announced will give rise to an alternate black market and also shut the foreign investments pouring in through this particular channel. The government understands all these aspects and already formed a new committee by disregarding the old bill made by the committee to ban crypto" said Kumar Gaurav, founder and CEO, Cashaa, a crypto-friendly neo bank.
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