Indian residents cannot trade in foreign exchange in domestic or overseas markets, under the Foreign Exchange Management Act (FEMA), clarified the RBI.
The RBI also clarified that remittance in any form towards overseas foreign exchange trading through electronic or Internet trading is not permitted under the FEMA
Residents are, however, permitted to trade in currency futures and options contracts, traded on the stock exchanges recognised by the SEBI, subject to the conditions specified by the RBI.
The RBI's warning comes after Internet portals started advertising offers of trading or investing in foreign exchange with guaranteed high returns. Many companies even engage agents who personally contact gullible people to undertake forex trading or investment schemes and entice them with promises of disproportionate or exorbitant returns.
In light of such advertisements, the RBI has cautioned the public not to remit or deposit money for such unauthorised transactions. “The advice has become necessary in the wake of many residents falling prey to such tempting offers and losing money heavily in the recent past,” the press release issued by the RBI said.
Published on February 21, 2011
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