is Forex Trading App legal in India?

The RBI cautions the public not to fall in trap of advertisements issued by online trading platforms, which entice people for forex trading or investing with promises of exorbitant returns by using a binary trading system. Under FEMA, 1999 binary trading is not allowed, although due to ignorance many people falling prey to such tempting offers and losing money heavily. To discuss your case with Ozg Lawyers & Experts, please WhatsApp or Email to: ask@fema.in


RBI observed that some people continue to use online trading in forex platform app, offering them attractive schemes wherein they initially remit funds from Indian bank accounts using credit cards or other electronic channels like paypal to these app and subsequently receive cash refunds from these these app into their credit card or bank accounts. With a view to further strengthening the restrictions on such online activities which are in violation of FEMA, 1999, banks are already directed as follows:

i. All banks which offer credit cards or online banking facilities to their customers should advise their customers that any person resident in India collecting and effecting / remitting payments directly /indirectly outside India in any form towards forex trading through any such portals and app would make himself / herself / themselves liable to be proceeded against with for contravention of the Foreign Exchange Management Act (FEMA), 1999 besides being liable for violation of regulations relating to Know Your Customer (KYC) norms / Anti-Money Laundering (AML) standards.

ii. As and when any bank comes across any prohibited transaction undertaken by its credit card or online banking customer the bank will immediately close the card or account of the defaulting customer and report the same to RBI.

If it is observed that the concerned bank has failed to carry out the measures as outlined above, RBI may proceed against the defaulting bank under section 11(3) of FEMA, 1999 and take any action as may be deemed necessary. 

Note: Information provided here in this post is based on following original source (whereas Bank means AD Category 1 Bank): (A.P. (DIR Series) Circular No. 46 dated September 17, 2013).

To save your time and #legal cost on your FEMA compliance including #EDPMS or #IDPMS #settlement matters, please WhatsApp or write an email to: ask@fema.in


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