Crypto investors in India may be able to use net banking and debit cards to buy cryptocurrencies again.Banks in India had withdrawn services from crypto exchanges earlier this year, after an informal warning from the Reserve Bank of India (RBI).- According to a report by the Economic Times, most customers switched over to using UPI to buy crypto — a channel that falls outside the purview of banks.
The development comes even as the Indian government yet to make up its mind about how to govern cryptocurrencies in the country. According to Finance Minister $4, India’s crypto bill is waiting on approval from the cabinet.
However, sources told Business Insider that a $4 may be formed to reword the bill. The government may be softening its stance on cryptocurrencies in the face of surging popularity in $4.
Banks allowing for crypto transactions may not entirely have to do with them becoming crypto friendly, following in the government’s footsteps. According to the report by ET, banks can only monitor transactions going through net banking or debit cards. Those using the Unified Payments Interface (UPI) channels to buy crypto are outside the purview of the banks.
“We were not allowing any transaction up until recently, and that is still our official stance. But it’s difficult to monitor so many transactions and some do get through,” a banker told the publication.
WazirX listed top banks like Punjab National Bank, Union Bank of India and Industrial Development Bank of India (IDBI), Deutsche Bank, Federal Bank and more as eligible for net banking.
This is in stark contrast to May when Indian banks had stopped doing business with exchanges after an informal communication from the country’s central bank, the Reserve Bank of India (RBI), warned them against working with these firms. Many banks started $4 the accounts of $4 almost overnight, forcing many to stop taking rupee deposits from their users.
Further, in a letter to users on May 31, a couple of banks from India started warning their users against dealing with crypto firms. In its $4, HDFC Bank, the largest private sector bank in India, told customers that virtual currency transactions weren’t permitted, citing a 2018 letter from the RBI, which banned such transactions. This led to widespread concerns about banks’ relationships with crypto exchanges.
Interestingly, the RBI letter cited by HDFC Bank and some others, had been struck down by the Supreme Court of India (SC) in May 2020. The SC’s decision was hailed by the crypto industry, which in turn was able to take advantage of the bull run cryptocurrencies like Bitcoin and Ethereum underwent late last year.
The RBI also issued a notice on May 31, revoking the letters sent by these banks. Sharan Nair, chief business officer (CBO) of CoinSwitch Kuber, one of the top four crypto exchanges in India, explained that the move from banks comes after a circular from India’s central bank, the Reserve Bank of India (RBI).
That said, things aren’t fully back on track just yet. “We offer multiple payment modes for Indian investors, such as UPI, Paytm UPI, IMPS, NEFT and RTGS. We also allow users to buy/sell cryptocurrency using their credit/debit cards but we see most of these transactions getting declined by the credit/debit card providers,” Jay Hao, CEO of cryptocurrency exchange OKEx.com told ET.
Alternatively, crypto exchanges in India can use multiple transaction channels, including Net Banking, RTGS and UPI. While banks can control the net banking and RTGS channels, they have no control on UPI, which is a digital payments platform built by the government. As long as banks allow crypto firms to hold bank accounts in their establishments, users can use UPI to deposit money on exchanges.
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