The Reserve Bank of India (RBI) has warned that several foreign
exchange trading platforms have emerged recently and are preying on gullible
people with the promise of higher returns. It said it has noticed misleading
advertisements of unauthorised electronic trading platforms (ETPs) offering
forex trading facilities.

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The RBI said people can undertake forex transactions only
with authorized persons and for permitted purposes as mentioned 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 in a press release.

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While permitted forex transactions can be carried out
electronically, they should be executed only on electronic trading platforms
authorized for the purpose by the RBI or on recognized stock exchanges
according to the terms and conditions specified by the RBI.

The RBI also clarified that remittances for margins to
overseas exchanges or overseas counterparts are not permitted under the
liberalized remittance scheme (LRS) framed under FEMA.

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Executing transactions for purposes other than those
allowed under FEMA or on unauthorised ETPs can attract penal action.

The central bank added that it had noticed misleading
advertisements of unauthorised ETPs offering forex trading facilities to Indian
residents, including on social media platforms, search engines, OTT platforms
and gaming apps.

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There were also reports of such ETPs engaging agents who
personally contact gullible people for forex trading or investment schemes and
promise them disproportionate and exorbitant returns.

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

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RBI has put a list of authorized persons and authorized ETPs
on its official website. A set of frequently asked questions (FAQs) on forex
transactions has also been placed on the website for the general guidance of
the public, RBI said in press release.