Don't deal with entities related to Bitcoins, RBI tells banks and NBFCs

The Reserve Bank of India (RBI) on Friday asked banks, non-banking financial companies (NBFCs) and payment service providers to disassociate themselves from entities dealing with virtual currencies, including bitcoins, with immediate effect. The notification comes a day after the central bank in a 'Statement on Developmental and Regulatory Policies' warned of risks associated with virtual currencies.

The RBI has repeatedly cautioned users, holders and traders of virtual currencies, including bitcoins.

The services flagged by the RBI include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, among others.

In his Budget speech on February 1, Finance Minister Arun Jaitley had said cryptocurrencies were not legal and affirmed to eliminate their usage. Since then, top banks, including HDFC Bank, SBI and CitiBank.