RBI keen on blockchain adoption by banks

RBI

RBI has time and again issued warnings against making any investments in all kinds of cryptocurrencies including Bitcoin due to the uncertainty associated with them, but remains highly supportive of Blockchain technology

In consonance with most other central banks all across the world, RBI’s harsh stand on Bitcoin is very much clear to all. RBI has time and again issued warnings against making any investments in the all kinds of cryptocurrencies including Bitcoin due to the uncertainty associated with them. Coming down hard on the virtual currencies, RBI on Thursday announced that all the entities regulated by it shall not deal with or provide services to any individual or business entities dealing with or settling VCs (virtual currencies). The regulated entities which are already in association with such institutions should exit the relationship within three months, BP Kanungo, Deputy Governor, RBI told reporters on the sidelines of monetary policy review.

Even though coming down hard on cryptocurrency, stance was highly supportive of the blockchain technology. Blockchain technology should be encouraged and must be exploited more, RBI Deputy Governor said.

The country’s largest lender SBI (State Bank of India), in the month of February, announced that it will go for aggressive deployment of blockchain technology in its reconciliation, remittances and trade finance operations in fiscal year 2019. The blockchain technology will be used by the bank aggressively from now onwards, Mrutyunjay Mahapatra, deputy managing director and chief information officer at SBI, had then told Financial Express.

The central bank may issue a circular in this regard very soon. A three-month buffer period will be provided to the entities to close down their relationships with such businesses, RBI said. The regulator will also give a three-month buffer period to entities to unwind their business relationships.

The RBI has decided to ring-fence the entities governed by it which deal with entities associated with digital currencies, RBI said.

The central bank has issued repeated warnings against making any investment in the digital currencies last year. HDFC and Citi Bank have already banned use of its debit and credit cards to carry out transactions in cryptocurrencies.

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