RBI asks banks for customer due diligence for transactions in virtual currencies
Updated:
Updated:
May 31, 2021 21:27 IST
RBI asked banks, as well as other entities to continue to carry out customer due diligence processes in line with regulations governing standards
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RBI asked banks, as well as other entities to continue to carry out customer due diligence processes in line with regulations governing standards
The Reserve Bank of India (RBI) has advised banks and other regulated entities to continue to undertake due diligence of customers dealing with virtual currencies popularly known as crypto currencies.
In recent weeks, several lenders including HDFC Bank and State Bank of India, had officially flagged transactions relating to the purchase of cryptocurrency, warning customers of curbs, including permanent closure of accounts
Previously, through an email, HDFC Bank and State Bank of India had said that those who are dealing with virtual currencies will face account suspension citing a 2018 circular from the Reserve Bank of India. Notably, the circular was struck down by the Supreme Court in March 2020.
Express News Service
NEW DELHI: In a major relief to crypto enthusiasts, the Reserve Bank of India (RBI) on Monday clarified that banks cannot shun transactions citing its 2018 circular as it is no longer “valid”. The clarification comes in the wake of banks denying services to customers dealing with virtual currencies. Some, including HDFC Bank and State Bank of India (SBI), have even warned users of account suspension if trading continues.
“The 2018 circular (on cryptocurrencies) was set aside by the Supreme Court on March 4, 2020. As such, the circular is no longer valid from the date of the judgement, and therefore cannot be cited or quoted from,” RBI said in a circular. The regulator, however, advised banks to continue doing due diligence of customers on any crypto-related dealings along with ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.