Central Bank of India studies the possibility of introducing fiat digital currencies – meanwhile, it was issued an official cryptocurrency ban

Rapid changes in the landscape of the payments industry along with factors such as emergence of private digital tokens and the rising costs of managing fiat paper/metallic money have led central banks around the world to explore the option of introducing fiat digital currencies. While many central banks are still engaged in the debate, an inter-departmental group has been constituted by the Reserve Bank of India (RBI) „to study and provide guidance on the desirability and feasibility to introduce a central bank digital currency”, according to a RBI statement. The Report will be submitted by end-June 2018.

In the same statement, the RBI says that technological innovations, including those underlying virtual currencies, have the potential to improve the efficiency and inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously referred to as crypto currencies and crypto assets, raise concerns of consumer protection, market integrity and money laundering, among others.

„Reserve Bank has repeatedly (on December 24, 2013, February 01, 2017 and December 05, 2017) cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding various risks associated in dealing with such virtual currencies. In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs. Regulated entities which already provide such services shall exit the relationship within a specified time.”

A circular in this regard is being issued separately.

According to the document the services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs. „Regulated entities which already provide such services shall exit the relationship within three months from the date of this circular.”

Source: The Reserve Bank of India