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The Reserve Bank of India (RBI) is in talks with banks and the government for more stringent measures to ensure that banking channels are not misused for illegal forex trading.

In a letter to all stakeholders last month, the RBI sought suggestions on the matter and also urged them to create greater public awareness.

Earlier this year, the Directorate of Enforcement arrested two businessmen in connection with illegal activity.

75 entities in alert list so far
The investigations revealed that the Kolkata-based accused controlled and managed 180 bank accounts, from which Rs 120 crore was seized.

“There would be far more scrutiny by banks on account holders making forex transactions on non-authorised platforms, including apps,” said one of the officials who didn’t want to be named. “The regulator wants lenders to further ensure that Know Your Customers (KYC) norms for all parties in such transactions are strictly followed.”

The RBI has so far named 75 entities in its alert list, which includes platforms and websites that are not authorised to deal in foreign currency or execute any forex transactions.

MeitY chips in
The ministry of electronics and information technology (MeitY) will work with the regulator to identify more such illegal platforms, another official said.

“The RBI has sought more suggestions on steps that can be taken to stop such transactions on social media platforms and asked us to hold and participate in awareness programmes,” he said.

The RBI didn’t respond to queries.

Permitted forex transactions can be executed electronically, but they should be on RBI-authorised platforms or recognised stock exchanges as per terms and conditions specified by the central bank.

“There can be more technology controls, which can only be worked out in conjunction with the government,” said a bank executive, adding that both state-run and private-sector banks will soon submit their suggestions to the regulator.

Last year, the central bank released an initial list of 34 entities that aren’t authorised to deal in forex under the Foreign Exchange Management Act, 1999 (FEMA). Neither can they operate electronic trading platforms (ETPs) for forex transactions.

Misleading ads
The banking regulator said that it has noticed 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 likes. Some of these entities include Alpari, AnyFX, Ava Trade, Binomo eToro, Exness, Expert Option, FBS, FinFxPro,, Forex4money and Foxroex, according to the RBI.

In the last two years, the RBI has issued advisories three times cautioning people against dealing with unauthorised entities. Resident persons undertaking forex transactions for purposes other than those permitted under FEMA or on ETPs not authorised by the RBI can be liable for legal action under FEMA, it warned.

  • Published On Dec 25, 2023 at 01:16 PM IST

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