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Overseas forex trading through electronic/internet trading portals --RBI circular


RESERVE BANK OF INDIA
Foreign Exchange Department
Central Office
Mumbai - 400 001
RBI/2011-12/262
A.P. (DIR Series) Circular No. 46                                     November 17, 2011  
To,
All Authorised Dealer Category I Banks
Madam/ Sir,
Overseas forex trading through electronic / internet trading portals
Attention of the Authorised Dealer Category - I (AD Category - I) banks is invited
to A.P. (DIR Series) Circular No. 53 dated April 07, 2011 wherein AD Category I
banks were advised to exercise due caution and be extra vigilant in respect of the
margin payments being made by the public for online forex trading transactions
through credit cards / deposits in various accounts maintained with banks in India.
Further, AD Category-I banks were also  advised to exercise due caution in
respect of the accounts being opened in the name of individuals or proprietary
concerns at different bank branches for collecting the margin money, investment
money, etc. in connection with such transactions.
 
2. It has been observed that overseas  foreign exchange trading has been
introduced on a number of internet /electronic trading portals luring the residents
with offers of guaranteed high returns  based on such forex trading. The
advertisements by these internet / online portals exhort people to trade in forex by
way of paying the initial investment amount in Indian Rupees. Some companies
have reportedly engaged agents who personally contact people to undertake forex
trading/ investment schemes and entice them with promises of disproportionate /
exorbitant returns. Most of the forex trading through these portals are done on a
margining basis with huge leverage or on an investment basis, where the returns
are based on forex trading.  The public is being asked to make the margin 2
payments for such online forex trading transactions through credit cards / deposits
in various accounts maintained with banks in India. It is also observed that
accounts are being opened in the name of individuals or proprietary concerns at
different bank branches for collecting the margin money, investment money, etc. It
is again reiterated that AD Category - I banks should exercise due caution and be
extra vigilant in respect of the transactions that require residents to make margin
payments for online forex trading transactions through credit cards / deposits in
various accounts maintained with banks in India. It is clarified that any person
resident in India collecting and effecting / remitting such payments directly
/indirectly outside India would make himself/ herself 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.
3.  AD Category - I banks may bring the contents of this Circular to the notice
of their constituents and customers concerned. Authorised Dealers may also give
wide publicity to the instructions contained in the A.P. (DIR Series) Circular No. 53
dated April 07, 2011 and the Press Release issued by the Reserve Bank dated
February 21, 2011 (copy enclosed). The instructions contained in this circular may
also be brought to the attention of the card issuing companies who may also be
advised to remain alert against permitting payments for such unauthorized
transactions.
4.  The directions contained in this circular have been issued under sections
10(4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999)
and are without prejudice to permissions / approvals, if any, required under any
other law.
        Yours faithfully,
                 (Meena Hemchandra)
Chief General Manager-in-Charge

source: RBI

for information of candidates -- Banking related general awareness
Overseas forex trading through electronic/internet trading portals --RBI circular Reviewed by sambasivan srinivasan on 6:38:00 AM Rating: 5

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