Are Indian Banks Like Digibank and Kotak Mahindra Closing Accounts For Crypto-related Activity?

By Prashant Jha

Digibank, the first digital bank of India, is reportedly closing down accounts that were allegedly involved in crypto dealings. This report comes directly from a Digibank user who took to Twitter through her handle @Desicryptohodlr (Indian CryptoGirl) to follow up on her earlier allegations against another Indian bank.

In a previous post, she had levelled similar allegations against major private bank Kotak Mahindra, saying that account holders were facing anti-crypto measures from the bank’s end.

We know that the Indian government and especially the Indian central bank (Reserve Bank of India) have not been too keen on cryptocurrencies for a long while, although recent reports surfacing have suggested that the Indian government might be putting crypto legalization in the pipeline, with certain restrictions soon.

You May Also Read: Why RBI Doesn’t Trust Cryptocurrencies in India

Before considering the allegations against these major Indian banks, you must know that the RBI, the country’s apex bank had released a prohibitive guideline to banks, directing them to stop dealing with all crypto-oriented businesses in April 2018. The guidelines were put into effect in April, triggering a backlash from many crypto supporters, including John McAfee.

The tweet from the Indian CryptoGirl said that the Digibank authorities implemented a credit freeze on her bank account with them right after they found transactions with some parties that are usually known as being crypto traders.

She attached a screenshot in her tweet, of the email she received from the bank. The email was a notice from the bank’s end, telling her that she would not be allowed to make any deposits anymore and that her account would be permanently closed down within a period of thirty days.

To quote the email (as seen in the screenshot):

“Reserve Bank of India through their public notices have warned/advised [the] public regarding risks associated with virtual currencies. We reiterated the same vide our emails dated 4th May 2018 and 2nd Aug 2019, cautioning our account holders [against] the risks associated […] and that DBS accounts and debit cards should not be used for [their] purchase or any kind of dealings.”

A crypto media outlet quoted the Indian CryptoGirl having said to them that she was prompted to check her email after some of her Twitter followers warned her about an account closure by Digibank.

The quote, received by said media outlet in their private correspondence with her, goes as follows:

“I’ve been a user of DBS’ Digibank for a year. Although I regularly used Kotak Mahindra Bank for my cryptocurrency transactions, I used Digibank only 7 times throughout the year. On January 14th, I received multiple messages from my twitter [sic] followers regarding an account closure notice by digibank [sic]. I checked my mailbox and found the mail myself.”

This tweet has generated a bit of outrage and has prompted allegations against banks like UCO and India Bank as well. Reportedly, DBS-owned Digibank has stuck to its guns, claiming that it was committed to following RBI’s guidelines to the T and serving customers accordingly.