HDFC Bank Ltd. has begun cautioning its customers officially against dealing in virtual currencies, according to emails sent by the lender reviewed by BloombergQuint. These emails inquire about the customers’ virtual currency transactions and advise against such transactions citing a 2018 circular from the Reserve Bank of India, which was later struck down by the Supreme Court.
Some other organisations, such as SBI Cards & Payment Services, have also sent out mailers saying that services may be curtailed if customers use their cards to deal in cryptocurrencies. BloombergQuint could not ascertain whether other lenders have sent similar emails.
According to an email sent by HDFC Bank to Rinku Saini, a 21-year old cryptocurrency investor from Rajasthan, the private lender said, “We have observed that your account reflects probable virtual currency transactions which aren’t permitted as per RBI guidelines.”
The e-mail dated May 28, 2021, has been reviewed by BloombergQuint
Saini, who has been dealing in cryptocurrencies at least for the past four years, has held a savings account with HDFC Bank since 2019 that he uses for cryptocurrency transactions and for his regular expenses.
In the email, the bank cited RBI’s 2018 circular that barred regulated entities from providing services to any individual or business dealing in virtual currencies.
The Supreme Court had struck down the central bank circular on cryptocurrencies in March last year citing “proportionality” and saying the RBI has failed to show the damage that these tokens are doing to the financial system.
Another customer of the bank, Sanat Mehrotra, a 29-year old entrepreneur from Gurugram in Delhi NCR, who has held a savings account with HDFC Bank for the last 13 years, has also been using it for making investments in cryptocurrencies.
On Friday, he said the lender had also sent him an e-mail inquiring about his crypto-related transactions. The e-mail sent to him by the bank was reviewed by BloombergQuint. It was the same as the one received by Saini.
“I received a call from an HDFC Bank executive three weeks ago, in which the person said that they wanted to understand about my dealings in cryptocurrencies,” said Mehrotra. “When the person claimed crypto investments were illegal, I asked them to send a written note clarifying the same.”
A number of other customers also took to social media to complain.
An e-mail sent to HDFC Bank on Friday evening wasn’t answered.
Emails have also gone out from SBI Card to its customers.
“Please note, usage of credit card for transactions on virtual currency merchant platforms may lead to suspension/cancellation of your SBI Credit Card in terms of the Cardholder Agreement,” an email dated May 28, reviewed by BloombergQuint, said.
Suraj Pawar, a 28-year old advocate from Pune, received one such email on Friday even though he claims he has never used his SBI credit card for any crypto-related transactions. “It was completely out of the blue for me. I don’t know why they sent this email as I have never used their credit card for any crypto transactions,” he told BloombergQuint on Saturday. Pawar has been dealing in cryptocurrencies for the last five years.
Mohit, another SBI Card customer who did not reveal his full name to protect his identity, also said he got a similar email from the company despite not having used his SBI credit card for any virtual currency transactions. Relatively new to crypto, Mohit said he had started investing in cryptocurrencies only since January this year.
An email sent to an SBI Card spokesperson on Friday remained unanswered.
“Banking is an essential service that should not be denied to anyone but for a good and proportionate reason. The Supreme Court had held that a banking ban on crypto-users is disproportionate. While the judgment applies to RBI and not the banks, it is, as their regulator, morally obligated to intervene,” said Anirudh Rastogi, founder of Ikigai Law, who represented the crypto-exchanges before the Supreme Court.
Many lenders have started to withdraw services to cryptocurrencies businesses and transactions.
Earlier this month, a number of large private banks such as ICICI Bank Ltd., HDFC Bank, IndusInd Bank Ltd. and Yes Bank Ltd. began pulling away from cryptocurrency exchanges, with some stopping account services to these businesses, BloombergQuint reported. The move came after RBI made informal calls to bank teams seeking information about the extent of business that they do with cryptocurrency traders and exchanges.
On May 11, some large cryptocurrency exchanges in India began informing their customers that deposits on their platforms were disabled due to issues with their payments partner. This, as banks have been pushing payment processors to stop using their nodal accounts for facilitating crypto transactions.
The notices to customers take the process of curbing cryptocurrency trading in India a step further even though it is not formally banned. A Bill looking to ban cryptocurrencies had been listed in the budget session of parliament but was not introduced.
This news is republished from another source. You can check the original article here