The Supreme Court on set aside an April 6, 2018, circular of the Reserve Bank of India (RBI) prohibiting banks and entities regulated by it from providing services in relation to virtual currencies (VCs).
It found the RBI circular “disproportionate” with an otherwise consistent stand taken by the central bank that VCs were not prohibited in the country. Besides, the court found that the RBI did not consider the availability of alternatives before issuing the circular.
VCs are digital currencies in which encryption techniques are used to regulate the generation of the currency units and verify the transfer of funds, operating independently of a central bank. LEARNING WITH TIMES
- The Reserve Bank of India is the supreme monetary and banking authority in the country. It keeps the cash reserve of all scheduled banks and hence is known as Reserve Bank. It was established on April 1, 1935 . Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. Its main function includes; formulate, implements and monitors the monetary policy, prescribes broad parameters of banking operations within which the country’s banking and financial system functions, Manages the Foreign Exchange Management Act, 1999, Issues and exchanges or destroys currency and coins not fit for circulation, Banker to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. RBI Governor SHAKTIKANTA DAS