RBI cautions against unauthorised forex trading platforms

The Reserve Bank of India (RBI) on February 3 cautioned against unauthorised foreign exchange trading platforms, saying several such entities had popped up recently and were preying on gullible people with the promise of higher returns.

People should carry out forex transactions only with authorised persons and for permitted purposes as laid out in the Foreign Exchange Management Act, 1999 (FEMA).

"The RBI cautions the public not to undertake forex transactions on unauthorised ETPs (electronic trading platforms) or remit/deposit money for such unauthorised transactions," the central bank said.

While permitted forex transactions can be executed electronically, they should be undertaken only on electronic trading platforms authorised for the purpose by the RBI or on recognised stock exchanges.

Those undertaking transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the RBI can face penal action under the foreign exchange act, it said.

The RBI said it had come across 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 likes.

There were also reports of such ETPs engaging agents who contacted gullible people for forex trading or investment schemes, promising exorbitant returns, the RBI said.

“Further, there have been reports of frauds committed by such unauthorised ETPs / portals and many residents losing money through such trading / schemes,” the RBI said.