According to latest Indian news outlets, State Bank of India (SBI), the financial powerhouse of India, has barred Indian crypto exchanges from utilizing its payment mechanism called “Unified Payments Interface” also known as UPI. Payment service providers have been directly advised by SBI to suspend usage of the UPI particularly for the merchants of crypto.
SBI is currently ranked as one of the top banking channels in India and is regarded as the “financial powerhouse”. SBI is also accredited for introducing India’s first platform for unified payment option known as “UPI”. The interface was designed and produced by India’s National Payments Corporation (NPC) at the request of SBI. The purpose of the interface was to facilitate the users carrying out their transactions relating to interbank transfers. However, most importantly, the interface did not require the users to submit any physical instruments for executing interbank transfers. Instead, they could utilize the facility directly from their hand-held devices i.e. cellphones.
The project is currently one of the most famous interbank transfer option mechanisms utilized by the majority of customers of local financial institutions. In addition, the interface is subject to supervision and regulation exclusively by the Reserve Bank of India. However, SBI was in the knowledge for a long that UP was also used by crypto trading and exchange platforms of India. Now SBI has decided that it should immediately suspend UPI’s utilization by the local crypto exchanges.
After deciding to suspend, an official warning in the form of a public notice was published by SBI. In the publication, SBI has told that crypto exchanges should forthwith withdraw themselves from using SPI. In addition, the payment processors, who were dealing particularly with merchants of crypto, too were warned directly by SBI. They were told to immediately refuse to send any moneys to crypto exchanges while using the UPI.
SBI’s enforcement action would directly affect the customers belonging to SBI itself. This means that the customers of SBI would no longer be able to transfer their funds to any crypto exchange through SBI’s UPI. However, the access of the customers will not be curtailed if they would want to conduct transactions excluding crypto exchanges, clarified SBI.
When media contacted SBI to explain why such an enforcement action has been taken, its officials refused to comment. They suggested that under SBI’s policy, they cannot comment on an ongoing matter.
The action taken by SBI is not the first of its kind in India. In the past, several Indian major banks too have suspended the option through which their customers can transfer funds to crypto exchanges. In fact in the month of May this year, NPC suggested that it would not curtail crypto exchanges’ access to the UPI. However, NPC also told banks that if any bank wants to terminate access, then it can do so at its sole discretion.