NEW DELHI: The Reserve Bank of India (RBI) is concerned that cryptocurrencies may impact financial stability in Asia’s third-largest economy. These major concerns have been conveyed to the government, RBI Governor Shaktikanta Das said in an interview with a news channel. The central bank had banned banks and other regulated entities from supporting crypto transactions in 2018 after digital currencies were used for money laundering and terror funding.
But, the Supreme Court cut the curbs last year in response to a petition by cryptocurrency exchanges. Meanwhile, the central bank is working on procedural issues to launch its digital currency in the country soon, though a date has not been finalised yet. Prime Minister Narendra Modi’s administration is proposing to prohibit all private cryptocurrencies and create a framework for an official digital currency.
“We have major concerns about cryptocurrencies. We have communicated them to the government. It is under consideration and I do expect and I think sooner or later the government will take a call and if required Parliament also will consider and decide,” said Das.
However, the central bank is not opposed to the blockchain framework, on which cryptocurrencies such as bitcoin are traded. “Blockchain technology is different and its benefits need to be exploited,” he added.
Private digital currencies have gained popularity in recent years. “In India, the regulators and governments have been sceptical about these currencies and the associated risks.
Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and, in case there is, how to operationalize it,” the central bank had said in a recent study. If this happens, the RBI will join other central banks including China, where it has electronic yuan.
PSB acquirers should have deep pockets: RBI
The Potential owners wanting to take over public sector banks (PSBs) will have to meet the Reserve Bank of India’s (RBI) ‘fit and proper’ criteria and ensure that the banks, post-takeover, are well capitalised according to Governor Shaktikanta Das. His remarks come in the wake of Finance minister Nirmala Sitharaman’s announcement in the Union Budget that as part of the government’s “strategic disinvestment and sale” programme it proposes to take up the privatisation of two PSBs.