The National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCUB), an apex promotional body of urban cooperative banks and credit societies, says credit societies need prior approval of authorities before offering any crypto assets to its members.
One of the cooperative banks -- United Multi State Credit Co-operative Society, which claimed to have a tie-up with Cashaa, a crypto assets player, plans to offer virtual currencies from next month. United is a Multistate Credit Cooperative Society registered under Multistate Cooperative Society Act-2002.
Cashaa founder Kumar Gaurav was quoted in the media saying they do not need the RBI's permission for this model. "United is also a member of the National Federation of Urban Co-operative Banks and Credit Societies Ltd (NAFCUB) vide membership No. 1753 and certified with ISO 9001:2008 for Quality Management Systems," he said.
This statement is, however, not true.
BusinessToday.In spoke to Ramesh Mantri, a board member of apex body NAFCUB. "They (United Multi State) have not renewed the members for the last 5-6 years. They are also not even interested in renewing or continuing the membership," says Mantri.
"I sense something wrong or illegal," warns Mantri, whose body represents 1,600 cooperative banks and more than 50,000 cooperative credit societies across India.
Cashaa, which is not a regulated financial institution, has launched Unicas, which it claims to be the world's first crypto-friendly financial institution with physical branches in India. The company with a tie-up with United Multistate Credit Co-operative Society, which has a presence in Delhi and Rajasthan, has ambitious plans to launch savings account services in Indian rupees and also in cryptocurrency, provide loans for buying crypto-assets, and also lending against the crypto portfolio.
The RBI had earlier raised concerns regarding the crypto assets especially from the angle of consumer protection, market integrity of players, and also the possibility of money laundering activities. In March last year, the Supreme court had set aside the RBI's April 2018 circular directing banks to stay away from dealing in cryptocurrencies. The Supreme Court has actually allowed trading and investment in crypto assets.
In fact, some private sector banks were still using the old RBI circular to warn customers against investing in crypto assets as the government was seriously considering bringing some sort of legislation or completely banning cryptocurrencies.
In May this year, the RBI has also clarified that banks should stay away from using an old RBI circular to warn the public or its customers against the crypto assets.
Clearly, there is a lot of grey areas that some of the players are trying to take advantage of.
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