The Reserve Bank of India (RBI) has cautioned the public not to undertake forex (foreign exchange) transactions on unauthorised Electronic Trading Platforms (ETPs) or remit/deposit money for such unauthorised transactions.
The central bank warned that resident persons undertaking forex transactions for purposes other than those permitted under the FEMA (Foreign Exchange Management Act) or on ETPs not authorised by it shall render themselves liable for penal action under the Act.
Misleading advertisements
RBI said it has noticed misleading advertisements of unauthorised 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 observed that there have also been reports of such ETPs engaging agents who personally contact gullible people to undertake forex trading/investment schemes and entice them with promises of disproportionate/exorbitant returns.
Further, there have been reports of frauds committed by such unauthorised ETPs/portals and many residents losing money through such trading/schemes.
Authorised route
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 (National Stock Exchange of India Ltd., BSE Ltd. and Metropolitan Stock Exchange of India Ltd.) as per the terms and conditions specified by the RBI from time to time.
RBI also clarified that remittances for margins to overseas exchanges/overseas counterparties are not permitted under the Liberalised Remittance Scheme (LRS) framed under the FEMA. There are five authorised ETP operators — Clearcorp Dealing Systems (India) Ltd. (operates seven ETPs); ICAP IL India Pvt. Ltd. (operates one ETP); Three Sixty Trading Networks (India) Pvt. Ltd. (operates two ETPs); Refinitiv India Transaction Services Pvt. Ltd (operates two ETPs), and Bloomberg Tradebook Singapore Pte Ltd (operates one ETP), per RBI.