The Reserve Bank of India (RBI) issued a warning on February 3 about unlicensed foreign exchange trading sites, claiming that numerous such firms had lately emerged and were preying on unsuspecting individuals with the promise of larger profits.
People should only engage in foreign currency with approved individuals and for legal reasons, as defined by the Foreign Exchange Management Act of 1999. (FEMA).
“The RBI cautions the public not to undertake forex transactions on unauthorized ETPs (electronic trading platforms) or remit/deposit money for such unauthorized transactions,” the central bank warned.
While allowed FX transactions can be carried out digitally, they should only be carried out on digital trading systems approved by the RBI or on registered stock exchanges. Those who conduct transactions for purposes other than those approved by FEMA or on ETPs not authorized by the RBI may face criminal charges under the Foreign Exchange Act, according to the statement.
The RBI stated that it has come across deceptive ads for unlicensed ETPs offering forex trading services to Indian nationals, including on social media platforms, search engines, over-the-top (OTT) platforms, gaming applications, and other similar platforms.
According to the RBI, there have also been allegations of such ETPs using agents who contacted naive consumers for forex trading or investment schemes that promised excessive profits. “Further, there have been reports of frauds committed by such unauthorized ETPs / portals and many residents losing money through such trading/schemes,” the RBI said.
