Why RBI and Banks are not in favour of Crypto/Bitcoin

Bitcoin is decentralized which means it is not owned by one person or a single entity. Because of this people want to get rid of the traditional banking system which is completely owned by banks. The government has complete control of the baking system through the RBI and its a govt body that controls all banks and financial institutions in India. Since its a traditional system so it has been running the same way for decades with no changes in the overall mechanism. Banks are making good money because they are earning more and paying like peanuts to depositors and some share of this also goes to RBI.

Every system should have some changes after a certain period but in this system, any change that will favor the people who deposit their money in banks will reduce the benefits of banks. So its obvious that no bank would want to bring change and being a benefitted authority RBI would also never like to happen.

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Now coming to crypto, we have seen that RBI and banks have never supported crypto because they know that this is going to affect their business. Although few banks have started exploring the possibilities this number is too less and the majority of banks in India still see crypto as a threat to their business. There are a few points that we need to go through why banks and RBI don't support crypto -

• Crypto is a new technology-driven ecosystem that gives complete control to people whereas the current banking system is just the opposite of it. So if crypto gets more adoption in India then banks will lose control and this will affect their business. No one likes to lose control and authority and the same is happening with the banks in India.

• Currently banks are earning the majority of their revenue through lending services where they offer loans at higher interest and pay very little on deposits. This difference is huge and banks earn huge through this model. If banks support crypto then they know that it results in their revenue loss because major might move to crypto space for investment and their earning ratio through deposits will reduce drastically.

• Since crypto is backed by highly advanced technology while there are many banks who are still using old technology so crypt acceptance will cost them to update their technological infrastructure which will cost them more. Another possible reason could be that they don't want to adopt the chnage when they know that its going to hit them so its better to avoid it than adopt it.

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The Reserve Bank of India said it favors a complete ban on cryptocurrencies at a meeting of its central board on Friday, the Economic Times reported, citing unnamed people familiar with the deliberations.

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In the current situation when India has got more than 100 million active crypto traders/holders with a total investment of 70,000 crore INR so it would not be easy for the government to take the harsh decisions. Its good if govt realizes the economical aspects but its unlikely to believe that govt would like to take a hit on themselves as winning the next election would be tough for them if it happens.

Thank you so much.