RBI warns against unauthorised platforms offering forex trading facilities

The Reserve Bank of India (RBI) on Thursday cautioned people against unauthorised Electronic Trading Platforms (ETPs) offering forex trading facilities to Indian residents. 

In an official notification, RBI said that it has observed misleading advertisements of unauthorised Electronic Trading Platforms (ETPs) offering forex trading facilities to Indian residents, including on social media platforms, search engines, Over The Top (OTT) platforms, gaming apps and the like. 

The central bank explained that there have been reports of such ETPs engaging agents who personally contact gullible people to undertake forex trading and investment schemes and entice them with promises of disproportionate as well as exorbitant returns. 

It further added that there have also been reports of frauds committed by such unauthorised ETPs and portals and many residents losing money through such trading.

"It is clarified that resident persons can undertake forex transactions only with authorised persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA)," noted RBI. 

The central bank further explained that while permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock exchanges as per the terms and conditions specified by the RBI from time to time.

RBI conveyed that remittance for margins to overseas exchanges as well as overseas counterparties are not permitted under the Liberalised Remittance Scheme (LRS) framed under FEMA ( Foreign Exchange Management Act ).

"The RBI cautions the public not to undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the RBI shall render themselves liable for penal action under the FEMA," read the notification. 

A list of authorised persons and authorised ETPs is available on the RBI website.

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