The Reserve Bank of India (RBI), the central bank of India, has instructed banks that its banking ban circular is “no longer valid” since it was set aside over a year ago by the supreme court of the nation. Despite the ruling of the supreme court, banks have relied on the RBI circular to excuse themselves when having to deal with crypto.
“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.”
That April circular banned banks from dealing with crypto, but the Indian supreme court reversed this in March 2020, which allowed banks to offer again services to crypto businesses and exchanges.
The RBI said: “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 04, 2020, in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from.”
It also added: “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 banking restrictions were annulled in March 2020, but this hasn’t stopped many Indian banks from using it as an excuse to not deal with crypto transactions.