Just when financial institutions in India were reportedly softening their stance on crypto, a prominent bank in the country has stopped payments to crypto exchanges through UPI.
According to reports, the country’s largest lender, State Bank of India [SBI] has stopped payments to cryptocurrency exchanges using its UPI option. This news comes months after several banks in the country warned their users from sending money to these exchanges.
UPI, which is short for ‘Unified Payment Interface,’ enables account holders of a bank to send and receive money from their phones without the need for divulging bank account details or even net banking user ID and password. It is one of the most used ways to make payments in the country.
It is important to note that, National Payments Corporation of India [NPC], the umbrella organization for operating retail payments and settlement systems in the country that developed the instant payment system, have said that they are not banning crypto despite being a specialized division of Reserve Bank of India [RBI].
However, financial institutions such as the State Bank of India have their own decision-making abilities. With its latest move of blocking crypto users from receiving funds via its UPI platform, the payment avenues in the country appear to be shrinking at an alarming rate.
India’s WazirX affected by the latest move
Binance-acquired WazirX, which happens to be a popular crypto venue in the country, was also affected by the decision. Many users on the platform resorted to using one of the e-wallet services to transact. Its CEO Nischal Shetty said that they were trying to have a talk with the bank and put relevant points forward. He also added,
“WazirX follows KYC [know your customer] norms and AML [anti-money laundering] policies. Being the largest crypto exchange in India, millions of Indians are currently affected due to this move by SBI. We look forward to a positive resolution soon”
The lack of regulatory clarity in the country has been a major hindrance to crypto adoption. The latest decision by the bank will likely trigger other banks to follow suit. An official verdict on cryptocurrency exchanges in the country is yet to see the light of the day. Jayant Singh, Chairman of the Parliamentary Standing Committee on Finance, had recently stated that the government would take a “distinctive approach” to regulate the crypto ecosystem in India.