RBI Governor Warns Against 75 Unauthorized Forex Trading Platforms

The Reserve Bank of India (RBI) has issued a warning against 75 unauthorized forex trading platforms, including OctaFX and Binomo, that are offering illegal currency pairs and casino-like features to users in India. RBI Governor Shaktikanta Das cautioned that these platforms are not authorized by the central bank to operate in the country and are making misleading advertisements to offer forex trading facilities on over-the-top (OTT) platforms and gaming apps.

According to the RBI, forex trading in India is only permitted in four currency pairs with the Indian rupee as the base currency: USD/INR, EUR/INR, GBP/INR, and JPY/INR. Trading in any other currency pair is illegal and can attract penalties under the Foreign Exchange Management Act (FEMA). Indian citizens are also prohibited from trading foreign currencies overseas either directly or indirectly.

The unauthorized forex trading platforms flagged by the RBI are often used by corporates and traders to hedge their foreign currency risks. However, these platforms are offering illegal currency pairs and casino-like features to lure in unsuspecting customers. The central bank has asked banks to remain alert and come out with a list of these unauthorized entities involved in forex transactions.

Why this matters: The RBI's warning highlights the risks posed by unauthorized forex trading platforms to Indian consumers and the integrity of the country's foreign exchange market. By operating outside the regulatory purview, these platforms can expose users to potential losses and facilitate illegal forex transactions.

The RBI is working closely with banks and the government to prevent the misuse of banking channels by these unauthorized platforms. The central bank has issued several advisories cautioning against dealing with such entities. The Enforcement Directorate has also attached the assets of some of these firms as part of its crackdown on illegal forex trading.

In a statement, RBI Governor Shaktikanta Das said, "We have noticed that a number of unauthorized electronic trading platforms (ETPs) offering forex trading facilities to Indian residents have come to our notice. Such unauthorized ETPs lure the gullible public with promises of disproportionate or exorbitant returns." He urged the public to be cautious and avoid dealing with such unauthorized platforms to protect themselves from potential financial losses.

Key Takeaways

• RBI warns against 75 unauthorized forex trading platforms offering illegal services.
• Forex trading in India is only permitted in 4 currency pairs with INR as base.
• Unauthorized platforms offer illegal currency pairs and casino-like features to lure customers.
• RBI asks banks to remain alert and provide a list of these unauthorized entities.
• RBI and Enforcement Directorate are taking action to prevent misuse of banking channels.