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Governor Shaktikanta Das on RBI’s big concern over cryptocurrency

A deeper discussion on the issue of cryptocurrencies was called on Tuesday by Shaktikanta Das, Governor of the Reserve Bank of India (RBI).

At the State Bank of India’s Economics Conclave, Shaktikanta Das observed that when from the point of view of macroeconomic and financial stability, if the central bank says they have serious concerns, then there are far more deeper issues involved.

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Shaktikanta Das also regretted that in the public space on these issues, there were no serious and well-informed discussions.

A Bill on cryptocurrencies is in the process of being drafted by the central government. However, it is not clear what shape the bill will take.

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Last week in India, the number of cryptocurrency accounts was exaggerated, around 70-80% of which accounts were of small denominations such as Rs 500, Rs 1000, and Rs 2000.

Feedback received by the RBI stated that open accounts are being provided credit and other incentives.

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Reserve Bank of India (RBI) is taking a closer look at the strategies of banks, said Governor Shaktikanta Das. In the commercial decision of banks, the RBI would not interfere, but also, at the same time, the business models of banks would be closely monitored.

Governor Shaktikanta Das said that banks should follow robust strategic discussions in their boards, and they should ensure that their business models and business choices are conscious in nature. He also added that the market approach should be followed.

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While arguing over more active roles of the boards, especially in challenging the proposals of the management, Shaktikanta Das said there were few banks who took the high risk and high return business strategy, with a skewed view to serve only their investors’ interests.

Shaktikanta Das said that the RBI is cautiously is moving to a situation in rebalancing liquidity where the banks have adequate liquidity instead of having an excess of it.

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Governor Das also said that the central government is closely looking at the bank’s business models so that they are abreast of vulnerabilities and risks building up therein.

However, irrespective of the fact that liquidity is in surplus, banks themselves would diligently do the risk pricing of loans, said Governor Shaktikanta Das.

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