India: Private sector bank ‘blocks account for cryptocurrency use’; threatens to expunge credit facility


The Indian judiciary and banking elite have made clear their opinion on the use of cryptocurrencies in the past few years. After the central bank came down hard on private banks known to have ties with crypto-centric companies, now these private banks are doing the same to their customers as well.

Based on a tweet from prominent Indian cryptocurrency influencer, @DesiCryptoHodlr, Kotak Mahindra Bank, a large Indian private sector bank sent her a curt email in lieu of her cryptocurrency activity. On May 15, @DesiCryptoHodlr stated that her account had been blocked by the bank, in addition to closure of her credit card facility without any intimation.

Indian CryptoGirl, who achieved notoriety within the cryptocurrency circle recently, by being named a Blockchain Pioneer by the largest exchange in the world, Binance, stated:

“Kotak Mahindra Bank, after blocking my account, sent this mail 2 days ago threatening to block my Credit Card without intimation if I buy #Cryptocurrency
Banks will always have the power to control what you buy with your own money
Be your own bank. Seriously, buy #bitcoin”

Additionally, the Twitterati attached a screenshot pertaining to an “Important Notification,” published by Kotak Mahindra Bank, which reiterated the RBI’s negative stance on “virtual currencies and re-enforced the bank’s backing of the same.

Source: Twitter

In 2013, the Reserve Bank of India [RBI] cautioned the citizens against the use of virtual currencies citing the “security risk” involved. The Indian government, in later years, put its foot down, stating that cryptocurrencies are “not legal tender” and hence are not subject to “regulatory permission or protection in India.”

Kotak Mahindra attested to the central bank’s claim and stated:

“Kotak Mahindra Bank does not encourage its customers using their accounts maintained with us or who have availed credit cards facility to carry out transactions involving any kind of crypto / virtual currencies and hence we request you to refrain from transactions involving dealing in Bitcoin or any kind of crypto / virtual currency. “

The notice concluded with a threat, stating that if the account and Credit Card in question continues involving cryptocurrencies, the card will be blocked.

Similar behavior was seen with the HDFC bank, another top private sector bank in India. HDFC issued emails asking crypto customers to “clarify” the nature of their transaction within a 30-day period, failing which their account would be ‘frozen.”

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