National Payments Corporation of India (NPCI) has refused to ban cryptocurrency transactions.
- Further, it has put the onus on banks whether to ban transactions of cryptocurrency trades or not.
- It told banks to make a decision based on the advice of their legal and compliance departments.
- The National Payments Corporation of India (NPCI) serves as an umbrella body for the operation of retail payment in India.
- This organization was established by the Reserve Bank of India along with the Indian Bank’s Association under the provisions of the Payment and Settlement Systems Act, 2007.
- Presently, NPCI is promoted by ten major promoter banks.
- NPCI can operate the following payment systems:
- National Financial Switch (NFS).
- Immediate Payment System (IMPS).
- Affiliation of RuPay Cards (debit cards/ prepaid cards) issued by banks and co-branded credit cards issued by non-banking financial companies (NBFCs) or any other entity approved by the RBI.
- National Automatic Clearing House (ACH).
- Aadhaar Enabled Payments System (AEPS).
- Operation of Cheque Truncation System.
- Products of NPCI:
- National Common Mobility Card.
- Bharat Interface for Money (BHIM).
- Unified Payments Interface (UPI).
- Bharat Bill Payment System.
NPCI’s decision is based on the Supreme Court’s March 2020 ruling which set aside a directive by the Reserve Bank of India from April 2018 to ban banks and finance companies for “dealing in virtual currencies or providing services to facilitate” anyone trading in crypto.
- NCPI has not blocked the trades given that the RBI did not come out with any directive following the Supreme Court ruling.
- Cryptocurrencies are digital currencies in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
- It works on blockchain technology.
- Examples: Bitcoin, Ethereum, etc.