In a letter to clients sent on Tuesday March 13, HDFC explained that the measure was taken in order to protect customers. The letter allegedly states:
"To ensure our customer’s security, we have decided to not permit usage of HDFC Bank credit, debit and prepaid cards towards purchase or trading of such bitcoins, cryptocurrencies and virtual currencies on merchants suspected to be dealing in cryptocurrency or online foreign exchange trading or both."
The letter also mentioned that the Reserve Bank of India had repeated warnings to citizens “regarding the potential economic, operational, legal and security related risks associated in dealing with such currencies."
The move follows last month’s Citibank India decision to ban both credit and debit cards for crypto purchases due to “security-related risks associated in dealing with bitcoins.”
The ban specifically of credit cards for crypto purchases was initiated by US giants J.P. Morgan Chase, Bank of America, and Citigroup on Feb. 3, 2018. The move was followed by the largest bank in the UK, Lloyds Banking Group, Feb. 5, and Virgin Money in Australia, South Africa, and the UK on Feb. 6. A couple of weeks ago, one of the largest Canadian banks, TD Bank joined the list.
On Monday, March 12, former Indian Gov’t Official Shaktikanta Das argued that cryptocurrencies “should not be allowed at all,” because there is no way to regulate cryptocurrency “effectively.”