Amid reports of banks and RBI-regulated entities cautioning customers from dealing with virtual currencies by making a reference to the RBI circular dated April 06, 2018, RBI today issued a clarification on the status of the circular. It may be noted that Supreme Court on March 04, 2020, had quashed the circular on the grounds of proportionality.
A notice from HDFC reviewed by the CryptoVakil team advised users to visit the nearest HDFC Bank and clarify the nature of certain transactions. The developments are at the back of reports on the informal ban by RBI on cryptocurrency exchanges and related entities. While the informal ban is off the record without any written direction, HDFC citing a Supreme Court quashed circular in written notices had raised eyebrows.
By today’s clarification, RBI had clarified that the April 6 circular is no longer valid and therefore cannot be cited or quoted from. RBI, however, advised banks and other regulated entities to continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT), and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.