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NPCI on Cryptocurrency Transactions

Cryptocurrency Transactions:

Montreal, Canada – 28 February 2018: Stacked cryptocurrency coins (Bitcoin, Ethereum, Litecoins)

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:
    • RuPay.
    • 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.

About Cryptocurrency:

  • 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.

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