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Reserve Bank of India (RBI) issues Alert List of unauthorized forex platforms

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In light of increasing unauthorized dealers and electronic trading platforms (ETPs) providing forex transactions, Reserve Bank of India (RBI) has issued a list of entities which are providing such services without Reserve Bank of India (RBI) approval.

Under Foreign Exchange Management Act (FEMA), only authorized persons, which includes authorized dealers (ADs), money changers, off-shore banking units or other persons authorized by Reserve Bank of India (RBI) can only deal in foreign exchange and foreign securities. Based on the nature of the entity and activities permitted they are placed in different four (4) categories of authorized dealers.

However, recently a lot of unapproved and unauthorized platforms have surfaced. Reserve Bank of India (RBI) has issued a non-exhaustive list of such entities along with their domain details in its Alert List. Such a list includes some well known names such as Binomo Thailand (sponsor of SunRisers Hyderabad Cricket Team), OctaFX (sponsor of Delhi Capitals Cricket Team), OLYMP TRADE NIGERIA etc. that were being endorsed by many social media influencers on Facebook, YouTube, Twitter, Instagram, etc.

Reserve Bank of India (RBI) reiterated that “…resident persons can undertake forex transactions only with authorised persons and for permitted purposes, in terms of the FEMA. While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock exchanges viz., National Stock Exchange of India Limited, BSEIndia and Metropolitan Stock Exchange of India Ltd. Members of the public are once again cautioned not to undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the Reserve Bank of India (RBI) shall render themselves liable for legal action under the FEMA.”

Interestingly it is not the platform like unauthorized ETPs or the apps or the exchanges who alone has the liability but the persons undertaking such transactions as well.

Readers can share their views on the issue with Regstreet team at info@regstreetlaw.com.

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