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Guys this is absolutely exclusive. No one has reported this yet. Here's what RBI wrote in its reply to IAMAI after the Supreme Court mandated it to respond again with a point by point reply in August 2019.
The RBI has said it has the sole right to operate currency and credit system in the Country. It has exercised its right (Banking Ban) to secure the monetary stability. It also says, that RBI regulated entities were exposed to "reputational risks" by offering service to exchanges.
RBI cites the example of "Libra" (indirectly) to say that VCs are risk associated and hence the US watchdogs went after Facebook and its plan to launch its own virtual currency.

RBI also says Virtual currencies and crypto-assets are terms that can be used interchangeably
Commenting the use of Crypto-assets, RBI says they are well aware of Blockchain technology and are open to using it. RBI essentially says that Crypto Assets are a risk to users, and that RBI has to act in interest of the users because not all can mitigate the risks themselves.
RBI quotes an IDBRT paper to say VCs are volatile as there are limited number of coins and hence a lot of demand.

My Comment: Recently Subhash Chandra Garg wrote a blog saying VCs are too many and hence useless.
RBI's working group published a report in November 2017 and wrote the anonymity of VCs causes issues for Financial institutions which cannot identify a user and if VCs become prominent it could risk existing payment service infrastructure.
RBI cites a 2016 Ratan Watal Committee report that cited benefits in issuing an RBI backed Digital Currency. RBI says it encourages the use of (blockchain) technology but in a manner that it "does not undermine the faith and trust in digital payments"
IAMAI had written several names of prominent people who have recognized cryptocurrencies. RBI states that many politicians and industry leaders have recommended a negative or cautionary approach to VCs.

Names like: Arun Jaitely, Theresa May, Warren Buffet, Jack Ma and many more
IAMAI: Crypto assets are essential to Blockchain.

RBI: We strongly disagree.
RBI then says IAMAI members are supporting transactions to be sent to foreign exchanges like Binance, Localbitcoins, etc so they aren't truly following best practices as depicted by IAMAI.

RBI says even if there was a way to identify if the recipient is not Indian.

Conti.
It is difficult to enforce compliance like FEMA and LRS (Liberalised Remittance Scheme) where user can transfer upto USD 250000 per year for permitted transactions.

RBI says the volatility in price makes it difficult to enforce such regulations.
IAMAI: RBI's prohibition has caused multiple issues like exchanges losing business, shutting shops and users dealing in cash

RBI: RBI has not prohibited Virtual Currencies in India. RBI has simply directed entities to note provide services to businesses or person dealing in VCs.
RBI acknowledges that many IAMAI members are operating on a Peer to Peer exchange model. Essentially saying it is business as usual.

RBI says even if assumed people are dealing in Cash, the downside of not having the Banking ban is way more.
RBI also says the exchanges are prone to Cyber attacks due to the anonymous nature of Crypto, so it increases the risk further.

RBI says the IT act as it exists may not be adequate to address Cyber crime issues such as these.
The document is 30 pages long and I have tried to summarize it as best as I could. Hope this helps.

RBI put in a lot of effort to answer to the IAMAI representation. It remains to see what the counsels on the IAMAI have to say about it.
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