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RBI Publishes ‘Alert List’ of Illegitimate Forex Brokers, Warns Indian Residents

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The Reserve Bank of India (RBI) has issued a list of 34 forex entities that are unauthorized to deal in forex and operate any electronic terminals for forex transactions.

Previously in February, RBI had cautioned the residents to stay away from trading on prohibited electronic platforms and not to direct their money on such risky trading. However, the bank did not reveal the names of those brokers/entities at that time, which resulted in ambiguity.

The recently released list is aimed to clear the previously mounted uncertainties regarding the illegal operating platforms. Alpari, Ava Trade, Binomo, eToro, Forex.com, FBS, OctaFX, and Exness are some of the prominent names on the list. Note that this “34 names list” is not exhaustive as it was only based on the information present at the time of report publication. “An entity not appearing in the list should not be assumed to be authorized by the RBI,” RBI explained.  

The RBI has also clearly stated that locals can only engage with approved forex entities and execute forex transactions for permitted purposes according to the Foreign Exchange Management Act (FEMA), 1999. While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorized for the purpose by the RBI or on recognized stock exchanges viz., National Stock Exchange of India Ltd., BSE Ltd. and Metropolitan Stock Exchange of India Ltd,” the report said

Anyone undertaking transactions against the FEMA or using electronic trading platforms unauthorized by RBI can encounter strict legal action under the Foreign Exchange Act.  

Further, RBI has warned all social media platforms, gaming apps, and leading advertising services to halt the advertisements directing Indian locals towards unauthorized ETPs and forex brokers.

Forex trading regulation in India

The Reserve Bank of India (RBI) & the Securities Exchange Board of India (SEBI) primarily oversee forex trading activities in India. The RBI deals with foreign exchanges/brokers under FEMA Act, according to which traders must only join SEBI-regulated platforms to proceed with forex trading in the country.

Forex trading in India with a service other than the regulated ones is a non-bailable offense. Anyone found guilty of trading currencies against the stated terms in India can face serious penalties, such as imprisonment and financial liability.

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