TronWeekly

Crypto World News

You are here: Home / Archives for RBI

RBI

India’s RBI Directs Lenders Towards Digital Rupee

by

CBDC: In a bid to increase transactions, the Reserve Bank of India (RBI) has extended invitations to a broader set of lenders to engage in pilot programs centered around the central bank digital currency, as reported by three bankers who spoke to local media.

A recent survey conducted by the Bank for International Settlements (BIS) and published on Monday revealed that nearly twenty central banks in emerging and advanced economies are anticipated to have digital currencies in circulation by the end of the decade.

Last year, the RBI commenced trials using Central Bank Digital Currency known as e-rupees in both the wholesale and retail markets.

Currently, prominent state-owned and private lenders such as State Bank of India (SBI.NS), Bank of Baroda (BOB.NS), ICICI Bank (ICBK.NS), HDFC Bank (HDBK.NS), Kotak Mahindra Bank (KTKM.NS), and Yes Bank (YESB.NS) are participating in the pilot project.

RBI Targets: One Million CBDC Transactions

The technology head of a state-owned bank, who attended a meeting with RBI officials on Tuesday, disclosed that the RBI has instructed smaller banks to either collaborate with fintech companies or enhance their systems to initiate CBDC pilots this year.

Due to their lack of authorization to speak to the media, the bankers opted to remain anonymous. RBI Deputy Governor T Rabi Sankar stated on Tuesday that the RBI aims to achieve a target of one million CBDC transactions per day by the end of this year.

As of June 2023, there were 1.3 million customers and 0.3 million merchants utilizing CBDC, according to Sankar. Another banker from a state-owned bank remarked,

“By involving more banks in the pilots, the RBI intends to identify any implementation issues and conduct trials on a substantial user base. We are in the advanced stage of submitting a CBDC pilot request to the RBI. We anticipate receiving approval within the next one to two months.”

In recent weeks, Shaktikanta Das, the governor of the RBI, highlighted that there was no urgency to implement the CBDC on a larger scale. He acknowledged the existence of technological and procedural obstacles and expressed the RBI’s intention to address these challenges before introducing the CBDC in a manner that ensures a smooth and non-disruptive transition.

India’s RBI Urge Banks To Brace For Blockchain, AI Acceleration

by

India’s central bank, the Reserve Bank of India [RBI] has urged banks to concentrate on Blockchain and AI to be future-ready at a recently organized conference.

The deputy governor of the RBI, Mahesh Kumar Jain, spoke about risk management techniques for stable and sustainable growth. He acknowledged the disruptive paradigm shift in financial services brought on by the continuing Fintech revolution in the industry.

“Banking services are now being bundled with other financial and non-financial services and giving consumers the convenience of accessing the full spectrum of financial products.”

According to the top exec, the rate of technological development is accelerating to the point where banks will need to adjust to compete with technology companies that are constantly developing and making investments in new technology.

The risks of cyberattacks, data breaches, and operational errors have also increased manifold, Jain added.

He then urged Indian banks to adopt cutting-edge technologies like blockchain and artificial intelligence [AI], as well as to focus on digital transformation, improve customer experience, and make investments in cybersecurity measures.

To prepare for the future, Indian banks will need to focus on digital transformation, enhance customer experience, adopt innovative technologies such as AI and blockchain, invest in cybersecurity measures, look for opportunities to derive synergistic benefits through collaboration with other players as well as upskilling their workforce to meet the demands of the digital era.

To maintain long-term resilience and competitiveness in the changing banking market, they will also need to give priority to risk management, regulatory compliance, and sustainability, Jain concluded.

While Blockchain is viewed to be one of the more promising technologies, the RBI has persistently opposed cryptocurrencies, advocating for an outright ban.

India’s Crypto Tax Collection Totalled $19M In FY23

In 2021, Indian authorities imposed a 30% capital gains tax on cryptocurrency assets as well as a 1% tax deducted at source [TDS] on all digital assets transaction proceeds, all of which took effect on April 1, 2022.

As reported by TronWeekly, the Indian government collected 158 crores or $19 million in TDS from its cryptocurrency investors.

According to data given to the Parliament [the legislative body], tax deducted at source [TDS] on payments made upon transfer of virtual digital assets [VDA] generated Rs. 157.9 crores in direct tax income up until March 20, 2023.

RBI Chief Warns of Financial Crisis, Talks About Banning Crypto

by

The use and adoption of private digital assets in India have been met with skepticism from the government and watchdogs. Authorities have already suggested that capital gains from cryptocurrency trading in India will be subject to a 30% tax.

The governor of the Indian Central Bank has, however, issued a cautionary statement regarding the coming financial crisis.

“Change in value of any so-called product is the function of the market, but unlike any other asset, our main concern about crypto is that it doesn’t have any underlying [value] whatsoever.” “As a term, cryptocurrency is a fashionable way of describing what is otherwise a 100 percent speculative activity.

Das said

RBI chief talks about the recent crypto events

Shaktikanta Das, the governor of the RBI, spoke at the BFSI insight Summit about the recent collapse and changes in the cryptocurrency industry. However, he foresaw a potential financial crisis in the future and mentioned that it would be brought on by personal digital assets.

Das went on to say that he still believes the same thing about digital assets and wants them to be banned. He also added that the cryptocurrency has no intrinsic value. Private digital assets pose significant threats to financial and macroeconomic stability.

The RBI Chief brought up the significant FTX collapse while highlighting the recent decline in the crypto market. These incidents have proven to be a strong advocate for the Indian government’s stance against cryptocurrency. Das, however, argued that a shift in any product’s value is a market’s function.

According to RBI Chief, the purpose of cryptocurrencies is to circumvent and subvert the system. Das countered that he has not yet heard a convincing defense of the public good that cryptography serves. It is unclear in every way. He designated cryptocurrency as a speculative activity that needs to be outlawed.

Earlier it was reported that on December 1, 2022, the RBI would begin testing the Central Bank Digital Currency (CBDC)/Retail Digital Rupee. The secondary market transaction settlement will be put to the test by the watchdog.

In the meantime, the Indian government has come under fire from the populace for levying a high tax rate on the retail cryptocurrency trade.

India To Test CBDC From Dec 1 In These Four Key Cities

by

India would carry out the pilot testing of its digital currency e₹-R  from December 1st, 2022 across four cities namely Mumbai, New Delhi, Bengaluru, and Bhubaneswar, according to the press release shared by the Reserve Bank of India.

The scope of the pilot may be expanded gradually to include more banks, users, and locations as needed, according to the P.A.

Eight banks have been identified for phase-wise participation in this pilot. The first phase will begin with four banks, namely State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank in the four mentioned cities.

The remaining others would join this pilot subsequently, the apex bank stated.

The pilot would cover select locations in closed user groups [CUG] comprising participating customers and merchants. Through a digital wallet provided by the collaborating banks and kept on users’ mobile phones or devices, users would be able to conduct transactions with e₹-R.

“Transactions can be both Person to Person [P2P]and Person Merchant [P2M)] Payments to merchants can be made using QR codes displayed at merchant locations.”

Like cash, the digital token will not earn any interest and can be converted to other forms of money, like deposits with banks, per the blog.

As reported by TronWeekly, India’s central bank launched the pilot program for its virtual currency, allowing a select group of banks to settle secondary-market trades in government securities.

India’s RBI Continue Its Hard Stance Towards Cryptocurrency

India has been developing its CBDC plans for a while. Across the country, opinions on cryptocurrency are divided. The Reserve Bank of India has adopted an aggressive stance that ranged from a total prohibition on digital assets to imposing the draconian 30% tax and 1% TDS.

On CBDC, RBI previously stated in a concept note that it “will provide the users the same experience of dealing in currency in digital form, without any risks associated with private cryptocurrencies.”

Retail CBDC will initially be made available as a stand-alone product once it is deployed. However, consumers may be prompted to download an application or digital wallet that contains the e-rupee once the new currency is subsequently integrated with current online banking services.

The top bank urged customers to request specific denominations of e-rupees from their bank, which can then be put into each one of their individual CBDC wallets.

The Reserve Bank Of India (RBI) Nearly Ready To Deploy Retail CBDC

by

The Economic Times of India (ETI) reported on November 19th that the final steps of the Retail Central Bank-Backed Digital Currency (CBDC) deployment are being completed by the Reserve Bank of India (RBI).

It would be compatible with the country’s current payment systems and would make it easier for people to invest in cryptocurrency markets, a person aware of the developments said ETI.

However, the CBDC platform, which would resemble the NPCI’s universal payments interface (UPI) system, will be hosted by the National Payments Corporation of India (NPCI), according to the ETI’s report.

A person involved in the pilot said:

The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities.

Once deployed, retail CBDC will initially be offered as a stand-alone product. However, subsequent integration of the new currency with existing internet banking services can prompt consumers to download an application or digital wallet containing the e-rupee.

Additionally, customers are encouraged to request their bank for e- rupees at specific denominations, which can then be deposited directly into their respective CBDC wallets.

According to the statement:

Banks are in the process of onboarding existing customers and merchants on the app, the transaction railroads are pretty similar to UPI.

The RBI launched A Pilot For A CBDC

The Reserve Bank of India (RBI) began a pilot program for a CBDC Wholesale on November 1st. It set up an experiment with its digital currency, the Rupee. It started out for government securities when conducting secondary market transactions, then spread to wholesale and cross-border transactions afterward. 

According to the RBI’s concept note, the CBDC is meant to enhance current payment methods rather than to completely replace them. Instead of trying to take the place of the current payment systems, it aims to give people another way to pay.

Altogether there are nine institutions participating: State Bank, Bank of Baroda, Union Bank, HDFC Bank, ICICI bank, Kotak Mahindra Bank, Yes bank, IDFC First bank, and HSBC. According to the ETI report, the RBI wants each bank taking part in the trial to test the retail CBDC among 10,000 to 50,000 consumers.

Moreover, the RBI had previously stated that the launch of the first pilot program in the Digital Rupee-Retail segment was anticipated to take place within a month in a few key areas with closed user groups made up of customers and retailers.

Related Reading | FTX CEO Sam Bankman-Fried Received $300M From Prior Funding Round

RBI Says That India’s CBDC Will Go Hand in Hand With the Monetary Policies

by

The debut of India’s Digital Rupee CBDC, which is slated to take place in the current fiscal year 2022-23, is highly anticipated by the investors of the country.

According to a report produced by the Reserve Bank of India (RBI), the CBDC will be in line with the country’s current monetary policies and payment systems.

The Reserve Bank of India (RBI), which will have responsibility for the Digital Rupee, intends to use a graded approach in line with the country’s financial system.

A Central Bank Digital Currency (CBDC) is a central bank-regulated blockchain-based payment mechanism. While it functions similarly to a traditional cryptocurrency in that it allows for quick, high-value digital payments, CBDC transactions are traceable and overseen by the government.

Will India’s CBDC improve the government’s stance on crypto?

“The Reserve Bank proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept, pilots and the launch. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems.”

RBI highlighted in the report

The news comes after a top RBI official was quoted as saying that the CBDC would be implemented separately for the wholesale and retail sectors.

The country’s finance minister, Nirmala Sitharaman, has stated on multiple occasions that the Digital Rupee will expand payment choices for Indians.

The Indian government is also counting on the CBDC to expand its efforts to bring financial inclusion to people who have yet to access the country’s banking networks. The creation and roll-out of the Digital Rupee are underway, and the Indian government does not want to expedite the process.

RBI Governor T Rabi Sankar remarked in April that the launch of India’s first digital currency would require a sophisticated and calibrated approach because it would have multiple consequences for the economy and monetary policy.

Several other countries, including the United States, Russia, China, Jamaica, Nigeria, and Mexico, are working on their own CBDCs.

Crypto Might Lead To Dollarization of Indian Economy, Says RBI Officials

by

The Reserve Bank of India (RBI) is said to be worried about cryptocurrency acceptance, stating that it will lead to the “dollarization” of the Indian economy.

According to an unidentified source mentioned in a Monday piece in the Indian edition of the Economic Times, the RBI is concerned about cryptocurrencies dominated by the US dollar losing market share from the Indian rupee.

According to the magazine, RBI officials, including Governor Shaktikanta Das, held a briefing to the Parliamentary Standing Committee on Finance this week. They emphasized their pessimism about the possible influence of cryptocurrency on the financial sector. According to an unnamed source:

“Almost all cryptocurrencies are dollar-denominated and issued by foreign private entities, it may eventually lead to dollarization of a part of our economy which will be against the country’s sovereign interest.”

RBI thinks that crypto might undermine the economy

They cautioned that “it will substantially impair the RBI’s ability to establish monetary policy and govern the country’s monetary system.”

The RBI was said to be irritated by the prospect of digital assets being used in cross-border transactions rather than the rupee, and the typical anti-crypto cliches of terror funding, money laundering, and drug trafficking were also highlighted.

The RBI has shown an anti-crypto attitude twice this month, with Coinbase CEO Brian Armstrong stating last week that the RBI forced the exchange to shut down its United Payments Interface (UPI) in India.

Since announcing plans to regulate the business in December, it appears that the Indian government is not fond of digital assets and has adopted a cautious approach to digital assets.

On April 1, the government implemented a 30% tax on digital asset ownership and transfers, as well as a slew of other stringent taxation requirements based on gambling and lottery ticket win legislation.

In the 10 days following the legislation’s introduction, trading volume on major Indian exchanges fell by as much as 70%.

RBI’s top exec vouches for “outright ban” on cryptocurrencies, views them as Ponzi schemes

by

India’s RBI representatives continued to launch strong attacks on cryptocurrency. During a meeting with the Indian Banks’ Association [IBA’s] Annual Banking Technology Conference & Awards on February 14. RBI’s deputy governor T Rabi Sankar fired fresh salvos by demanding an outright ban on digital assets equating them with Ponzi schemes and ‘may even be worse’.

Banning cryptocurrency is perhaps the most advisable choice open to India,” Sankar said during his keynote address. “We have examined arguments by those advocating cryptos should be regulated and found that none of them stand up to basic scrutiny,” he said.

According to RBI’s top exec, the blockchain technology was built to evade government controls and it is been specifically developed to circumvent regulated financial systems like the Know-Your-Customer process and AML/CFT regulations [anti-money laundering and counter-terrorism financing].

These should be reasons enough to treat them with caution,” Shankar said. The RBI deputy governor said cryptocurrencies have no underlying cash flows, no intrinsic value, and are not amenable to definition as a currency, asset, or commodity.

RBI head likened crypto craze to Tulip mania

Earlier February 2022, in a monetary policy meeting, RBI Governor Shaktikanta Das had also issued a warning to investors as they would be investing in volatile assets at their own risk. He then went on to add that these cryptocurrencies have no underlying [value] not even a tulip.

Das said during a news conference following the monetary policy meeting said “Private cryptocurrency is a huge threat to macro-economic stability and financial stability, investors should keep this in mind that they are investing at their own risk,”

The RBI top boss was probably referring to the Dutch tulip bubble or the tulip mania. It was one of the biggest bubbles seen in history. Between the time period of November 1636 and February 1637, prices of tulip flowers surged by more than 20 times. When the bubble finally collapsed, prices of tulips too fell by over 99 percent according to some estimates. It was perhaps one of the first recorded instances of overtly inflated assets.

Cryptocurrency trades makes big moves in gold dominated India

by

The cryptocurrency market’s popularity vector has broken all ceilings with every realm of the financial world paying close attention to its developments. Even with all the recurring price fluctuations, the industry seems to have instilled a sense of trust amongst the public especially in nascent markets such as India.

Recent reports from the subcontinent claimed that the usually gold-obsessed Indians were pouring billions of rupees into the world of digital assets. Most of the investments came from the younger age group of 18-35, a generation that was reversing the trend set by their predecessors. Indian households contain close to 25,000 tonnes, most of which are seen as generational assets. Even in this climate, the cryptocurrency market has grown in leaps and bounds with transactions accounting for over $200 million.

Many young Indians agree that they would rather put their money into crypto than a traditional asset like gold. New traders have found out that the short-term sales and big profits made digital assets a more lucrative purchase than a majority of the options available now. The privacy and transparency aspect of digital assets was another beacon for new entrants to the market. Sandeep Goenka, the founder of Zebpay added:

They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.

Despite the industry’s success, it still had some way to go before it can overtake the gold market in the country. As of now, India’s $40 billion cryptocurrency market trails behind the Red Dragon’s $161 billion. For now, the increasing adoption is another sign of Indians’ willingness to take risk within a consumer finance sector that’s plagued with examples of regulatory short falls.

Crypto’s current stardom comes a few years after the Reserve Bank of India banned transactions in the country after calling out frauds and weak legislation. The ecosystem continued to receive pushback even after the Supreme Court quashed the ban last year and made all cryptocurrency transactions legal in the country. Investors believe that over time, digital assets will be adopted by nations worldwide.

India’s Central Bank Clarifies Circular on Cryptocurrency Ban to be Invalid

by

The cryptocurrency ecosystem in India has always been a contentious one. The lack of clarity has failed to address important aspects of the users in the region. In a brief respite, however, the country’s central bank and regulatory body Reserve Bank of India [RBI] clarified on Monday that its 2018 order directing financial institutions to halt dealing in digital currencies was revoked by the Supreme Court in March 2020.

Hence, the circular in question cannot be quoted by banks to refuse services to users dealing in cryptocurrencies. The clarification came in the wake of reports that certain banks such as HDFC Bank Ltd and State Bank of India [SBI] had warned customers via emails against engaging in virtual currencies such as Bitcoin.

Shrimohan Yadav, who happens to be the Chief General Manager of RBI stated,

“It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020.”

Our RBI has finally sent out this notice to banks after 15 months since the Supreme Court verdict. Never late than never and we have this as a reason to celebrate! #IndiaWantsBitcoin

A brief history into India’s relationship with crypto

It all started late 2017 after two PILs were filed in the Supreme Court of India, one that sought to ban outrightly purchasing and selling cryptocurrencies in the country, while the other urged for proper regulation. Soon after which the government had set up a committee to investigate the industry and recommend actions.

A few months later, in April 2018, RBI issued a circular restricting commercial and co-operative banks, payments banks, small finance banks, NBFCs, and payment system providers from engaging in cryptocurrencies as well offering services to all platforms which deal with them. This crippled the crypto ecosystem overnight as many trading volumes across exchanges in the country fell sharply and many lost their jobs.

In May 2018, several Indian crypto exchanges and platforms filed a writ petition in the apex court of the country.

The following year, the government-established committee presented its report, prescribing a ban on “private cryptocurrencies” in India. Despite this, the Supreme Court revoked the RBI’s circular terming it as unconstitutional.

However, in January 2021, it seems like the cryptocurrency industry in India is back to square one as the government planned to introduce a bill to not just create a digitized version of the national currency but also to ban digital currency dealings.