RBI Unearths unauthorized entities offering Forex trading facilities to Indian residents with promises of exorbitant returns

Foreign Exchange Transactions: A case has come to light of unauthorized entities providing foreign exchange trading facilities to Indian citizens by luring them with huge profits or returns. Banking sector regulator Reserve Bank of India has disclosed this.

The Reserve Bank of India said, it has received information that unrecognized entities are providing foreign exchange (Forex) trading facilities to Indian citizens by luring them with huge returns. Investigation has revealed that to provide the facility of unauthorized forex trading, these entities engage local agents who open accounts in different banks to collect margin money, investment or charges. This account is opened in the name of individual, proprietor, trading firm. But the transactions done in these accounts do not match with the purpose for which these accounts have been opened.

According to RBI, it has been observed that these entities are providing the option to citizens to remit or deposit funds in rupees through domestic payment systems such as online transfers, unauthorized forex transactions using payment gateways.

RBI said that under Section 3 of the FEMA Act, no one except authorized persons is allowed to deal or transfer foreign exchange or foreign security without the permission of RBI. No institution is allowed to operate electronic trading platforms without permission from RBI. Earlier, on 7 September 2022 and 10 February 2023, RBI had also raised concerns regarding unauthorized forex trading platforms.

RBI has said that there is a need to maintain strict monitoring to prevent the use of banking channels in providing unauthorized forex trading facilities. RBI has asked AD Cat-I banks (Authorized Dealer Category – I Banks) to exercise more vigilance and vigilance in this matter. If such cases are found, they have been asked to immediately report to the Enforcement Directorate and the Government of India.

read this also

Mutual Fund KYC: Whether KYC is done or not, mutual fund will be put on hold, check here