Top Customers of Indian private sector banks are being informed about the risks of investing in crypto assets. Customers have received emails from Axis Bank, HDFC Bank, and ICICI Bank in this regard, according to The Economic Times.
The banks noted cryptocurrency exchanges’ aggressive advertising operations, which aim to entice new consumers with promises of large profits while failing to educate them of the risks involved.
“Our concern is that while we may use various algorithms to track clients who are investing in crypto and have dialogues with them to warn them about the risks, we can’t go much beyond that since it’s depositors’ money,” Axis Bank Managing Director Amitabh Chaudhry told ET.
“I’m concerned when I see the advertising because they appear to indicate that it’s a deposit.” “According to one advertisement I saw, the returns are four times higher than fixed-deposit rates,” he continued.
The bankers also claimed that the Reserve Bank of India (RBI) had advised them to limit their ledger book’s exposure to crypto platforms. The central bank has adopted a firm stance against cryptocurrencies and related assets, with RBI Governor Shaktikanta Das stating that “there are substantial worries about macro-economic and financial stability” in India.
In 2018, the central bank warned banks in India not to provide services to cryptocurrency exchanges, an order that was overturned by the Supreme Court last year.
The government may draught a cryptocurrency regulation Bill in the upcoming winter session of Parliament due to the tense relationship between traditional financial institutions and the DeFi business. While insiders say cryptocurrencies would not be banned, they are unlikely to be recognised as cash. Cryptocurrency is intended to be classified as a commodity or an asset that can be traded.
“In general, banks have been cautious of the crypto business and have maintained a chilly attitude toward us. As a result, we’ve had several instances in India where large banks have been hesitant to grant banking access for crypto exchange integration. Because of the outages in our services, our users have also had to deal with this inconvenience “WazirX, a cryptocurrency exchange, employs Shashi Jha as its Head of Legal & Compliance.