The Reserve Bank of India (RBI) has added eight companies or apps to the “Warning List” of unauthorized forex trading platforms. Companies not authorized by the Central Bank include QFX Markets, 2WinTrade, Guru Trade7 Limited, Bric Trade, Rubik Trade, Dream Trade, Mobile Application, Mini Trade and Trust Trade.
This leaves a total of 56 platforms or companies on the central bank’s alarm list. According to RBI, they are not “authorized” to trade foreign exchange under the Foreign Exchange Management Act of 1999 (FEMA), nor to operate an electronic trading platform (ETP) for foreign exchange transactions under the Electronic Trading Platforms (Reserve Bank). Directions, 2018.
The RBI Alert List also includes companies that appear to promote unauthorized companies or ETPs, including by advertising such unauthorized companies or by claiming to offer training or consulting services. The central bank said companies not on the list could not be assumed to be authorized by the RBI.
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“The authorization status of each person/ETP can be determined from the list of authorized persons and authorized ETPs.”
To verify the authorization status of an individual or ETP, individuals should consult the Authorized Persons List and Authorized ETPs List on the Reserve Bank’s website.
Foreign Exchange (Forex) transactions in India are governed by the FEMA Rules 1999. Under the applicable legal and regulatory framework, residents of India can only buy or sell foreign exchange for permitted current and capital account transactions; and only by or to authorized persons, including recognized exchanges.
The RBI states that the country has seen an increase in unauthorized ETPs offering currency trading opportunities to residents in recent years. These are widely promoted across news platforms, social media and digital media including search engines, over-the-top platforms and gaming apps. It is said that their “misleading advertisements” often target gullible customers by promising disproportionate or exorbitant returns, bonuses on initial investments, and guaranteed rewards.
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“There have also been reports of such platforms hiring agents who personally contact potential clients to conduct forex trading/investment programs,” the RBI says, adding that such platforms are not authorized by the Reserve Bank and the forex transactions conducted on them violating the FEMA, 1999, Rules. “Such unauthorized platforms have the potential to attract less demanding customers and put them at risk of financial loss.”
To curb such practices and address the increasing complaints of individuals losing money and reports of fraud by these platforms, the RBI issued warnings on February 3, 2022, September 7, 2022 and February 10, 2023 individuals should not engage in foreign exchange transactions with non conduct authorized ETPs or transfer/deposit funds for such unauthorized transactions. “Residents who engage in foreign exchange transactions for purposes other than those permitted by FEMA or with ETPs that are not authorized by the Reserve Bank are subject to legal action under FEMA,” the central bank said.
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