Cryptocurrency: SBI Cautions Its Credit Card Users Against Bitcoin Trading

As the Union Cabinet has green signalled the bill banning unregulated deposit schemes in India, India’s largest public sector bank State Bank of India (SBI) has issued a cautionary and advisory note pertaining to Bitcoin trading to its credit card customers.

After HDFC bank, which holds 52% share of the Indian credit cards customer base, SBI with over 5 Mn credit card customers is the second largest credit card issuer in the country.

The note reiterates the fact that the Reserve Bank of India has issued advisories to financial institutions and the public that it has not given any license/authorisation to any entity/company to operate in cryptocurrency schemes or any virtual currencies such as Bitcoins.

It further says, “given concerns, both globally and locally, SBI Card would like to advise you to be mindful of potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with cryptocurrencies and virtual currencies.”

Prior to this, Citibank had also issued a similar notice stating that Citi India has decided not to permit the use of its credit and debit cards towards purchase or trading of such Bitcoin, cryptocurrencies and virtual currencies.

SBI, however, has not clarified its stance regarding the use of credit cards against Bitcoin or other cryptocurrencies trading.

The development has come at a time when Indian public sector banks primarily Punjab National Bank are struggling to recover from the largest ever banking scam in the history of the country.

Having wrongly issued over 293 letter of understandings (LoUs) to a few diamond traders in the past two years, the bank has now written off a whopping $1.77 Bn (INR 11,400 Cr), which is one-third of the bank’s market cap.

While the RBI has already issued several clarifications making it clear that Bitcoin or any other cryptocurrency is not a legal tender, in his budget speech, FM Arun Jaitley had reiterated that the Indian government will take all measures to eliminate the use of crypto-assets in financing illegitimate activities.

The Indian government today also green signalled a bill banning unregulated deposit schemes which apparently could include Bitcoin and cryptocurrency trading too.