Coming down hard on the cryptocurrencies including Bitcoin, RBI (Reserve Bank of India) on Thursday warned all the entities regulated by it to cut ties with any individual or businesses dealing with virtual currencies. Any such entity that deals or provides services to such businesses has to exit the relationship within three months, RBI Deputy Governor BP Kanungo told reporters on the sidelines of sixth bi monthly monetary policy review. The virtual currencies may not be governed by any uniform law, since they are accepted globally and adversely affect capital markets adversely, he added.
As the private digital tokens have emerged lately, many central banks are considering launching fiat digital currencies with the liability of the central bank, he said further. It will also reduce the cost of paper, so RBI will study the viability of launching such fiat currencies, RBI Deputy Governor said. Although critical of the virtual currencies, RBI Deputy Governor came out highly supportive of the blockchain technology. Blockchain should be encouraged and should be exploited, RBI Deputy Governor said.
RBI has been highly critical of cryptocurrencies including globally popular Bitcoin. Last year, the central bank issued repeated warnings to the digital currency investors in India over the uncertainty associated with them. Recently, HDFC and Citi Bank announced their decision to ban the purchase of Bitcoin using its debit and credit cards.
In February, State Bank of India (SBI) will go in for an aggressive deployment of blockchain in its reconciliation, remittances and trade finance operations in fiscal year 2019, Mrutyunjay Mahapatra, deputy managing director and chief information officer at SBI, told Financial Express. The bank expects that such a move will help it in lowering costs associated with its different functions by about 40-50 percent.