Citibank India Bans Use Of Debit And Credit Cards To Buy Cryptocurrencies

News, Regulation | February 15, 2018 By:

Banks in India have started banning customers from using credit and debit cards for purchasing cryptocurrencies. The move follows concerns expressed by the Indian government regarding cryptocurrencies.

In an e-mail on February 13, Citibank India said it had barred customers from using debit or credit cards to buy cryptocurrencies. The bank said this is being done “given concerns, both global and local, including from the RBI, cautioning the public regarding potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with bitcoin and other cryptocurrencies.”

Citibank India is a subsidiary of Citigroup, which is a multinational investment banking and financial services corporation that had banned all crypto purchases using credit cards earlier this month. Citigroup’s ban came alongside that of Bank of America and JP Morgan Chase & Co. The UK’s Lloyds Banking Group and Virgin Money have also forbade cryptocurrency purchase for their clients.

Kotak Mahindra Bank, the fourth largest bank in India, has also announced it will not allow its customers to dabble in cryptocurrencies. The bank warned that any type of crypto activity noticed on accounts would be immediate grounds for closure.

Indian Banks’ Association CEO VG Kannan said that it wouldn’t be surprising if other Indian banks follow suit, as the government and the central bank have been issuing cautionary notices asking investors to stay away from cryptocurrencies.

“In fact, the finance ministry even likened them to Ponzi schemes, where prices are driven by mere speculation,” Kannan said. “It (government notice) does seem like a warning. Therefore, no bank would like to deal with this kind of transactions, and they also want to discourage customers from it.”

However, other industry observers are less concerned about the ban. Ajeet Khurana, head of the Blockchain and Cryptocurrency Committee, said most crypto purchases are done through Internet banking, not using debit or credit cards.