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Business EconomyPosted at: Apr 24 2024 6:30PM


RBI crackdown on unauthorized forex trading entities

Mumbai, April 24 (UNI) In a major crackdown on “unauthorized” entities indulging in foreign exchange trading, the Reserve Bank of India (RBI) has warned of strict action against such transactions and people involved.
The RBI has come across instances of such entities offering forex trading facilities to Indian residents with promises of disproportionate/exorbitant returns, the RBI said in a statement adding that “there is a need for greater vigilance to prevent the misuse of banking channels in facilitating unauthorised forex trading.”
On investigation, it has been observed that to facilitate unauthorised forex trading, these entities have taken recourse to engaging local agents who open accounts at different bank branches for collecting money towards margin, investment, charges, etc.
These accounts are opened in the name of individuals, proprietary concerns, trading firms etc. and the transactions in such accounts are not found to be commensurate with the stated purpose for opening the account in several cases.
It is also observed that these entities are providing options to residents to remit/deposit funds in Rupees for undertaking unauthorised forex transactions using domestic payment systems like online transfers, payment gateways, etc.
Authorized Dealers Category – 1 (AD Cat-I) banks are, therefore, advised to be more vigilant and exercise greater caution in this regard.
“As and when AD Cat-I banks come across an account being used to facilitate unauthorised forex trading, they shall report the same to the Directorate of Enforcement, Government of India, for further action, as deemed fit,” it said.
AD Cat-I banks may bring the contents of this circular to the notice of their constituents and customers concerned. AD Cat-I banks may advise their customers to deal in forex only with “Authorised Persons” and on “authorised ETPs” and give wide publicity to the list of “Authorised Persons” and the list of “authorised ETPs” available on the RBI website. AD Cat-I banks are also advised to give publicity to the Alert List and the statement issued by the RBI in this regard.
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