The Reserve Bank of India (RBI) on Monday clarified that banks can no longer cite its circular on cryptocurrencies for not offering such products to customers, but said the lenders must adhere to local rules, which are quite exclusionary.
The central bank, in its circular dated April 6, 2018, had prohibited banks from dealing in cryptocurrencies or offering any service to customers on them.
The circular was challenged in the Supreme Court, which set aside the rules on 4 March, 2020.
However, the RBI said, banks continue to cite the 2018 circular by the RBI in order to justify why they are not offering any services on cryptocurrencies.
“In view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” the RBI said in a clarification on its website.
However, the central bank also cautioned banks that they must still 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.”Continue reading »