Indians are not finding it easy in recent weeks to engage in crypto exchange because the banks are restricting payment for users that sell or buy bitcoin.
There is no official statement from the government as regards the crypto ban or something related. However, the banks’ reactions towards crypto-related customers have been harsh. The current issues are a result of actions taken by top stakeholders in the finance sector.
In a recent Reuter report, both the reserve bank and the country’s central bank want the banks to stop crypto transactions. Most banks in the country want the National Payment Corporation of India (NPCI) to stop transactions of users that buy bitcoin or sell bitcoin.
NPCI didn’t adopt their opinion and told banks to make internal decisions. Since then, some bank users have not been able to use their accounts amongst other issues. The youth and younger adults are the ones facing most of the issues because they make up the larger population of bitcoin users.
Who/what is the NPCI
NPCI is an abbreviation for the National Payments Corporation of India. This body is in charge of retaining payment in the country. The NPCI has rejected the move to block crypto-related funds transfers. They put it to the bank’s compliance team to decide if they want their users to use the account for crypto trade or investment.
If the decision comes from the NPCI, investment or crypto trade will not be possible because it will affect all banks. Many banks are still allowing trades, and there is uncertainty on how long these banks will allow crypto-related transactions before they stop it.
Red notice alert
The issues that most banks have been facing in India are not only related to cryptocurrency. Naimish Shanghvi, the founder of India’s crypto news website Coincrunch in his statement with Coindesk, told them that he got a letter regarding his account saying his account is inconsistent and would be disabled in a month. “That the account is not performing the regular activity that it is expected to perform based on the details given during the registration process.
A report released by Coinrush last summer showed that Axis bank instructed its users to sign a compulsory agreement that the account user won’t sell or buy bitcoin in India and other altcoins. It is disheartening because most users that get the warning about their bank account are clients that have interacted with Wazirx’s account at Karur Vysya bank.
In another report, a user also shared the story of his sibling that got a letter from HDFC. The content of the letter is to confirm if the user used the account to buy biotin and engage in other crypto transactions. This user’s nickname is “Crypto Hustler” and the person didn’t share his personal information to avoid facing government punishment.
Struggle exchangers are facing
Nischal Shetty’s opinion
Nischal Shetty, the co-founder of WazirX, said that the banking issue is what crypto exchangers using WazirX are facing, and they are finding it uneasy about transferring from their bank for up to 2 weeks. Banks are giving users with banking APIs trouble to deposit. He added that the bank his exchange platform is working with stopped operations with them, and they had to source for another bank to make the transaction flow easy. In recent days and over the weekend, banking service has been stopped. There is no precise regulation guiding these actions, and everything seems unclear. The RBI is yet to release an official statement, and it seems the banks are the ties that don’t want to give India crypto startups access.
The co-founder of Wasirx, a crypto exchange based in the Indian capital, Mumbai, made a statement and talked about the current development. He said the banking industry in the country is currently causing confusion, and many Indians that are crypto users are being affected by this. He also added that since the Supreme Court has reversed the circular regarding cryptocurrency in 2018, there is no reason why banks have to deny or go against what the court has ordered. Shetty, the CEO of WazirX, is putting it up to the banks to update or notify their users if there will be any change or if there will be a reason for them to comply with any change regarding banking. Instead, he said it’s not fair for them to go against what the Supreme Court of the country has said or deny any user of their bank transaction because it is crypto-related.
Vikram Rangala’s opinion
The chief marketing officer of ZebPay exchange Vikram Rangala also made a statement that their exchange had bank issues. He added that they couldn’t deposit for 24 hours, and they had to switch to manual deposit. In his statement, he said the banks are likely to go back to the 2018 RBI that has been overturned.
What could have been the cause
One of the top reasons why the banks do not want to allow crypto-related transactions is the rapid rise in bitcoin and other altcoins. This has made investors who wanted to choose banking as an option choose cryptocurrency instead, which is not favourable.
A senior executive that works at one of the country’s top payment gateway said the move made by the bank is to keep investors safe from the hype of crypto investment and the increased advertisement, which could cause more users to buy cryptocurrency in India and embrace the crypto sector that is not regulated.
The way forward
At this point, it is time Indians look inward and explore the major reason why cryptocurrency was first created. The cryptocurrency was created to be a P2P digital currency that allows trade without the involvement of a third party. With the P2P platforms, you can easily buy bitcoin in India and sell bitcoin without the need to worry about bank issues.
Indian banks have restricted the automation banking systems that allow crypto traders to buy bitcoin from their bank account, thus making it nearly impossible to buy or sell bitcoin through these exchanges. The only legitimate way to buy bitcoin in India now is through Remitano P2P exchange, thanks to their unique and secure fiat wallet feature.