Reserve Bank of India (RBI) Asks Local Banks Not to Quote Them on the Outdated 2018 Crypto Ban Circular

On Monday, May 31, the Indian Central Bank - Reserve Bank of India (RBI) - issued a fresh circular asking local banks not to quote them on the outdated 2018 circular that banned banks from dealing with crypto exchanges.

The RBI circular reads: “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 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 4, 2020.”

Last year, the Indian Supreme Court has already lifted the ban following which Indian crypto investors flocked to the exchanges once again. Over the last year, there’s been a massive surge in the crypto trading activities in India.

However, some of the investors recently complained on social media that banks have been limiting their funds for investing in crypto. The banks then referred to the 2018 RBI circular.

However, the central bank has clarified that the earlier circular now stands null and void. “As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from,” added RBI.

The RBI statement makes it clear that the central bank hasn’t asked the lenders to stop offering services to the exchanges. However, it doesn’t ask the lenders to restore the restricted services by points out that the lenders should ensure necessary compliance.

“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,” the circular said.