India’s Largest Bank Blocks Payments To Crypto Exchanges On UPI Platform
According to reports, State Bank of India (SBI) has blocked payments to cryptocurrency exchanges using its Unified Payments Interface (UPI). SBI has also told Payment processors to disable the bank’s UPI for crypto merchants.
According to Economic Times, the largest bank in the country, State Bank of India (SBI) has reportedly “blocked the receipt of funds by crypto bourses on its UPI platform,” citing sources in the payments industry.
Unified Payments Interface (UPI) is an instant real-time payment system developed by the National Payments Corporation of India (NPCI) to facilitate interbank transactions through mobile phones.
The UPI payment system is regulated and supervised by India’s central bank, the Reserve Bank of India (RBI). According to the report:
“The bank has told payment processors to disable SBI UPI for crypto merchants.”
Blocking UPI means that SBI bank customers are not able to transfer funds via UPI to crypto exchanges to buy cryptocurrencies.
An SBI spokesperson commented (or didn’t comment) the matter:
“It is the policy of the bank not to comment upon matters relating to the subject matter.”
Several banks in India have been making it difficult to make transfers to crypto exchanges. The NPCI, however, said in May that it will not block payments to crypto companies using UPI, and advised banks to make their own decisions whether to allow transactions involving cryptocurrencies based on their own risk assessment.
SBI has clearly made its decision, which may lead to other banks to be reluctant to onboard crypto merchants on their respective UPI platforms.
One of the largest Indian cryptocurrency exchanges, Wazirx, has already been impacted. CEO Nischal Shetty told Economic Times:
“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.”
While there has been no explicit direction from RBI to disallow payments for crypto trades, banks as well as several payment gateways have sensed the unstated regulatory stance on cryptos. In the course of meetings, RBI officials have voiced their reservations on cryptos, say senior bankers.
Significantly, the domestic umbrella body National Payments Corporation of India (NPCI), which developed UPI, has refused to block fund movements for cryptocurrency trades.
