RBI adds 8 more entities, apps to unauthorised forex platforms list

The Reserve Bank of India (RBI) has added eight entities or apps to the ‘alert list’ of unauthorised forex trading platforms. The entities not authorised by the central bank include QFX Markets, 2WinTrade, Guru Trade7 Limited, Bric Trade, Rubik Trade, Dream Trade, Mobile Application, Mini Trade, and Trust Trade.

With this, a total of 56 platforms or entities remain on the alert list of the central bank. As per the RBI, they are neither “authorised” to deal in forex under the Foreign Exchange Management Act, 1999 (FEMA), nor authorised to operate an electronic trading platform (ETP) for forex transactions under the Electronic Trading Platforms (Reserve Bank) Directions, 2018.

The RBI alert list also contains companies that appear to be promoting unauthorised entities or ETPs, including through advertisements of such unauthorised entities or claiming to be providing training or advisory services. The central bank said entities not appearing in the list should not be assumed to be authorised by the RBI.

"The authorisation status of any person/ETP can be ascertained from the list of authorised persons and authorised ETPs."

To check the authorisation status of any person or ETP, people should refer to the list of authorised persons and the list of authorised ETPs on the Reserve Bank’s website.

Foreign exchange (forex) transactions in India are governed by the FEMA, 1999, rules. As per the extant statutory and regulatory framework, persons resident in India can purchase or sell forex only for permissible current and capital account transactions; and only from or to authorised persons, including recognised stock exchanges.

The RBI says there has been a proliferation of unauthorised ETPs in the country offering forex trading facilities to residents in recent years. These are extensively advertised on news platforms, social media, and digital media, including search engines, over-the-top platforms, and gaming apps. It says their "misleading advertisements" are often targeted at gullible customers through promises of disproportionate or exorbitant returns, bonus on initial investments, and assured rewards.

"There have also been reports of such platforms engaging agents who personally contact prospective customers to undertake forex trading/investment schemes," the RBI says, adding that such platforms are not authorised by the Reserve Bank and the forex transactions undertaken on them are against FEMA, 1999, rules. "Such unauthorised platforms have the potential to attract less sophisticated customers and expose them to the risk of financial loss."

To put a stop to such practices and taking cognisance of growing complaints about individuals losing money and reports of frauds by these platforms, the RBI issued cautionary advice on February 3, 2022, September 7, 2022, and February 10, 2023. The RBI said people should not undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions. "Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the Reserve Bank shall render themselves liable for legal action under the FEMA," the central bank says.