The Governor of the Reserve Bank of India, Shaktikanta Das, seems not to go gentle with the flourishing crypto market in the country. He is constantly demanding crypto ban in India. As the legislation for the most significant financial sector innovation of the century enters its final phase, Shaktikanta Das has set a distinguishable line between the use of technology to enhance businesses and investments in unmoderated cryptos, which poses a devastating threat to the financial system of India.
A few days earlier, Shaktikanta Das has made severe remarks against cryptocurrencies, questioning their legitimacy. His comments ensued some quick movements from the parliamentary members. Additionally, Prime Minister Narendra Modi held a meeting with parliamentary members and some crypto industry experts to discuss the future of cryptocurrencies and their risks.
The Governor of the central bank of India, Shaktikanta Das, and Government do not agree with each other. Shaktikanta Das is openly advocating the crypto ban. On the other hand, the meeting held under the leadership of Prime Minister Narendra Modi concluded on the note that cryptocurrencies have become unstoppable. So, considering crypto ban is not an option now. The need of the hour is the formulation and implementation of precise strategies to keep a tab on these digital currencies.
The central government believes that the blockchain is an evolving technology and should be given some time to grapple with the opportunities that lie in the future. So, the central government agreed to proactively devise strategies to regulate cryptocurrency and create a safe environment for crypto trading.
“The blockchain technology has been around for more than a decade; it did not appear overnight. While addressing at a conference organized by the State Bank of India, Governor Shaktikanta Das very confidently said that “technology will flourish and can thrive without cryptos.
Why Is RBI Governor Firm On Crypto Ban In India?
Being a regulatory central bank, The Reserve Bank of India is worried about the exodus of investors from stock, mutual funds, fixed deposits to crypto investments that go to the tune of millions of dollars. This change in people’s interests and assets will eventually result in the declination of the supply and value of the Indian rupee. Additionally, the Reserve Bank of India doubts the usage of cryptocurrencies for unlawful operations and money laundering.
The Reserve Bank of India has said, after extensive internal debate, that there are significant concerns about the country’s macroeconomic and financial stability. There are more fundamental concerns that need a lot more in-depth discussion.”
Furthermore, Shaktikanta Das admonished lending banks against going overboard in their connections with large technology companies. He demanded that they include “adequate precautions” in their commercial contracts with such companies.
The Reserve Bank of India announced crypto ban in 2018 that made banks no longer able to transact in digital currencies, which blocked the growth of the cryptocurrency business in India. The RBI circular prohibiting cryptocurrencies, on the other hand, was verdict invalid by the Supreme Court in early March 2020, and thus crypto ban was uplifted.
It is also important to add adequate precautions in agreements with financial and technology companies, according to Shaktikanta Das. In the end, the risks are on the books of the banks and NBFCs; thus, the partnership must be well-strategized, the statement mentioned.
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Shaktikanta Das went on to say that although banks were allowed to adopt a collaborative business strategy with fintech businesses based on their commercial considerations, they were required to ensure that the model met all applicable regulations.
Speaking on the economic resurgence, Das said that festival euphoria, pent-up demand, and a slew of high-frequency indicators all pointed to the beginnings of a sustained period of economic growth and expansion. The data from many data indicators, according to Shaktikanta Das, indicated that consumer demand was on the rebound.
It seems that the consumer demand prompted by the holiday season is making a massive recovery; according to the Governor of RBI, “This would stimulate businesses to increase capacity, therefore increasing employment and investment in an environment of favorable financial circumstances.” The recent reduction in excise duty on fuel and diesel by the Central Government, as well as reductions in value-added tax (VAT) by various state governments, would increase people’s buying power, hence creating room for extra expenditure.”
Das went on to say that, with the economy on the mend and corporations enjoying improved balance sheets, they are in an excellent position to make fresh investments in developing markets.
‘As demand begins to recover, I am optimistic about the business sector’s ability to play a significant part in reversing the investment cycle, which will enable the absorption of excess cash for productive investment,’ he added.
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