From the past few days, Yes Bank is under the dark clouds since RBI superseded the operations on March 5th, 2020. Hitherto March 18th, the yes bank will be relieved from the moratorium. The happenings of the Yes Bank crisis led the Yes Bank shares to plummet and trade at as low as Rs. 6 per share. However, SBI became the lead rescuer of the consortium by investing Rs 7,250 crore in Yes Bank. Moreover, the shares saw interim relief as SBI hopes to resolve the moratorium. In addition, Kotak Mahindra, HDFC, ICICI banks are the other members of the rescue operation.
Blockchain and Cryptocurrency Shine as a Ray of Hope
The yes bank debacle is breaking down the confidence and trust in the Indian financial system. Instead of trying to restore the lost trust and reputation of yes bank, RBI can develop its own cryptocurrency “Rupee”.
Cryptocurrency and Blockchain technology, which the government is trying to quench out in finance, offers hope. The Indian government should consider official cryptocurrency to remove the need for trusted intermediaries. Previously, before the coronavirus outbreak, China also planned to launch its own central bank digital currency this year. But India’s need is greater, and its motivation very different from Beijing’s desire to shake the dominance of the dollar.
Banks await instructions from RBI for cryptocurrency transactions
In April 2018, the Reserve Bank of India (RBI) issued a circular to ban the trading of cryptocurrencies in the country. However, on March 4, the Supreme Court of India lifted this ban, allowing cryptocurrency trading after a series of court hearing. Following the announcement, many Indian cryptocurrency exchanges have enabled rupee deposits and withdrawals on their trading platforms.
Now, the stakeholders are demanding clear instructions from the Reserve Bank of India to banks to allow cryptocurrency transactions. Bankers have stated that channels for trading cryptocurrencies will only be opened at the express order of the central bank or parliament, as the legality of such transactions in India has not yet been clearly defined despite the SC ruling. Domestic banks are said to be testing the capabilities of domestic banks to enable such deals without a solid supervisory mechanism to control cryptocurrencies.
Rupee Token Comes as Rescue Amidst Money Laundering
As it is quite evident that the debacle of yes bank was due to money laundering. Thus, transparency, the basis of blockchain technology will overcome this issue. India can benefit from this blockchain technology and build a substitute digital payment system that will regain the users’ trust. The rupee token doesn’t require the holder to have an account with anyone but has value pegged by the Reserve Bank of India. Further, the RBI can validate the transactions to authorized parties on distributed ledgers.
RBI inactivity to launch easy-to-transact digital Rupee and shoving ordinary folks towards the less supervised banks like Yes, will carve a path for Silicon Valley-sponsored tokenized money – or Beijing’s digital yuan in India.