Indian commercial banks HDFC Bank, Axis Bank and ICICI Bank warn clients about the risks of investing in digital assets, despite the Indian authorities’ refusal to ban them.
In October, the Indian Ministry of Finance announced that it is working with the Reserve Bank of India (RBI) to create a legal framework for regulating cryptocurrencies. The government is working on legislation to control the cryptocurrency industry, but over the past three weeks, HDFC Bank, Axis Bank and ICICI Bank
sent out to clients investing in cryptocurrencies, emails warning about the risks of these investments.
Axis Bank Managing Director Amitabh Chaudhry said the bank is concerned about aggressive advertising of cryptocurrency exchanges and projects that attract people to invest in digital assets, which are characterized by sharp fluctuations in the exchange rate. In his opinion, advertising of cryptocurrency projects misleads people.
“We can use different algorithms to identify clients who invest in crypto assets and urge them to be careful. But little depends on us, because this is the money of depositors. I really get excited when I see ads for cryptocurrencies that look like ads for bank deposits. One cryptocurrency project announcement indicated that investors are guaranteed four times more income than a savings account, ”said Managing Director of Axis Bank.
Chaudhry added that commercial banks, in turn, are receiving warnings from RBI regarding cryptocurrencies. Therefore, Axis Bank does not service cryptocurrency transactions made by individuals or organizations. Although RBI clarified in June that in refusing to work with clients, commercial banks cannot refer to the 2018 cryptocurrency ban, which was overturned by the Indian Supreme Court in 2020.
Previously, RBI governor Shaktikanta Das advocated a complete ban on cryptocurrencies, believing that they pose serious risks to the country’s financial stability. Last week, at a meeting with the State Bank of India (SBI), Das reaffirmed his stance on digital assets.
Shashi Jha, head of compliance with cryptocurrency exchange WazirX, said that banks have always been conservative about the cryptocurrency industry, and still continue to show indifference to it. Jha said that the exchange already had experience of interacting with large banks, but it was noticeable that they were reluctant to do this – users often faced inconveniences due to interruptions in the provision of services. For example, from April to June, WazirX received about a million user requests due to problems with deposits, and some of the exchange’s customers had to wait more than 100 days to return funds to their account, Jha said.
Perhaps this situation was related to the investigation into the activities of WazirX. In June, Indian law enforcement officials accused the exchange of conducting illegal transactions totaling Rs 27.9 billion and money laundering.