State Bank of India blocked crypto exchange fund transfers using its UPI platform
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According to sources in the payment industry, the State Bank of India (SBI), India's largest lender, has barred digital currency exchanges from using its Unified Payments Interface (UPI) platform.
Payment processors have been instructed to stop providing services to cryptocurrency merchants using the bank's UPI. The Economic Times reported on Wednesday that SBI has “blocked the receipt of funds by crypto bourses on its UPI platform.”
"It is the policy of the bank not to comment upon matters relating to the subject matter," said an SBI spokesperson.
The Indian National Payments Corporation (NPCI) created the UPI to facilitate instant real-time interbank transactions using mobile phones. UPI is supervised and regulated by the Reserve Bank of India (RBI).
The decision by SBI follows several banks that have imposed similar bans on crypto-monetary transactions in the previous months. In May, HDFC Bank alerted investors against the usage of virtual currencies and was also advised that failure to follow the rules could result in transaction limits or even canceling their cards.
Several Indian banking institutions have limited financial transactions to cryptocurrency exchanges. Crypto traders are now increasingly using e-wallet services to continue transacting on crypto trading platforms, even with wallet fees and fund transfer limits.
"We're trying to discuss and put forward our points to SBI. WazirX follows KYC (know your customer) norms and AML (anti-money laundering) policies. Being the largest crypto exchange in India, millions of Indians are currently affected due to this move by SBI," said Nischal Shetty, Founder and CEO of Indian cryptocurrency exchange, Wazir X.
The NPCI has announced in May that UPI payments to crypto firms will not be banned. Instead, it advised banks to make their own decisions regarding digital currency transactions.
As a result of the decision made by SBI, many more banks can use their own UPI platforms to restrict crypto-transaction.
CBW - External Analyst