RBI Advises AD Category-I Banks to Be More Vigilant in Preventing Facilitation of Unauthorised Forex Trading

Circular No. RBI/2024-25/24 A.P. (DIR Series) Circular No.02; Dated: 24.04.2024

The RBI has come across instances of unauthorised entities offering foreign exchange (forex) trading facilities to Indian residents with promises of disproportionate/exorbitant returns. Upon investigation, the RBI observed that to facilitate unauthorised forex trading, these entities have resorted to engaging local agents who open accounts at different bank branches to collect money towards the margin, investment, charges, etc.

These accounts are opened in the name of individuals, proprietary concerns, trading firms etc. and the transactions in such accounts are not found to be commensurate with the stated purpose for opening the account in several cases.

Further, RBI observed that these entities are providing residents with options to remit/deposit funds in Rupees to undertake unauthorised forex transactions using domestic payment systems like online transfers, payment gateways, etc. Thus, greater vigilance is needed to prevent the misuse of banking channels to facilitate unauthorised forex trading.

In this regard, RBI has advised AD Category-I banks to be more vigilant and exercise greater caution to prevent the misuse of banking channels in facilitating unauthorised forex trading.

Further, as and when AD Category-I banks come across an account being used to facilitate unauthorised forex trading, they are required to report it to the Directorate of Enforcement for further action.

Also, AD Cat-I banks may bring the contents of this circular to the attention of their constituents and customers. They may advise their customers to deal in forex only with ‘Authorised Persons’ and on ‘authorised ETPs’ and give wide publicity to the list of ‘Authorised Persons’ and the list of ‘authorised ETPs’ available on the RBI website.

AD Cat-I banks are also advised to publicize the ‘Alert List’ and Press Releases issued by the RBI in this regard.

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