The Reserve Bank today directed banks to exercise caution with respect to online forex trading by Indian residents where margin payments through a credit card or deposit are required in view of the risk of fraud.
"Banks should exercise due caution and be extra vigilant in respect of the transactions that require residents to make margin payments for online forex trading transactions through credit cards/deposits in various accounts maintained with banks in India," the RBI said in a notification.
The RBI said it has observed instances where overseas foreign exchange trading has been introduced on a number of internet and electronic trading portals, luring Indian residents with offers of guaranteed high returns based on such forex trading.
"The advertisements by these internet/online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees. Some companies have reportedly engaged agents who personally contact people to undertake forex trading/investment schemes and entice them with promises of disproportionate/exorbitant returns," it said.
According to the RBI, most of the forex trading through such portals is done on a margining basis with huge leverage, or on an investment basis, where the returns are based on forex trading.
"The public is being asked to make the margin payments for such online forex trading transactions through credit cards/deposits in various accounts maintained with banks in India.
"It is also observed that accounts are being opened in the name of individuals or proprietary concerns at different bank branches for collecting the margin money, investment money, etc," it said.
The RBI warned that any person who is residing in India and engaged in collecting or remitting such payments either directly or indirectly abroad would be liable to face action as per the rules of the Foreign Exchange Management Act (FEMA) and other laws.
