Bitcoin trade faces sudden death in India as top banks suspend accounts

Some of India's lenders, including State Bank of India, Axis Bank, HDFC Bank, ICICI Bank and Yes Bank, have suspended accounts of some major Bitcoin exchanges, suspecting dubious transactions, in signs that the regulators may completely ban the virtual currency in the country.

The hit list includes the top 10 Bitcoin exchanges, including Zebpay, Unocoin, CoinSecure and BtcxIndia, reports quoting sources aware of the matter said.

The banks have also sought additional collateral from the promoters of these exchanges on their borrowings and have capped cash withdrawals from the few accounts that are still operational.

"Since last month, banks have been asking for additional collateral with 1:1 ratio," a person with knowledge of the matter said.

The banks are also scrutinising current accounts held by top Bitcoin exchanges, according to reports.

Meanwhile, a panel set up by the government to look into issues relating to cryptocurrencies is expected to submit its report in the current fiscal year, ending 31 March, CNBC TV18 news channel quoted economic affairs secretary SC Garg as saying.

''The government will take steps to make it illegal as a payment system,'' he said at a post-budget event telecast by the news channel, adding the trading of ''crypto assets'' at the unregulated exchanges would be regulated.

''We hope now within this financial year the committee will finalise its recommendations ... certainly there will be a regulator,'' Garg, who is heading the panel, said.

Also, crypto currencies are not legal tender in India and the government is  expected to take all measures to eliminate use of crypto assets in financing illegitimate activities or as part of payment system, as finance minister Arun Jaitley had told parliament while presenting his annual budget last week.

The government has issued repeated warnings against digital currency investments, saying these were like ''Ponzi schemes'' that offer unusually high returns to early investors.

But it has not so far imposed curbs on an industry estimated to be adding 200,000 users in India every month.