The Reserve Bank of India (RBI) has issued a warning to both banks and customers regarding unauthorised entities offering foreign exchange trading through banking channels.
In a circular released on Wednesday, the RBI highlighted instances where unapproved entities lure Indian residents with promises of high returns from forex trading, which often result in disproportionate and exorbitant gains.
The RBI noted that these entities typically employ local agents to open accounts at various bank branches to collect funds for margin, investment and charges associated with illegal forex trading activities. Transactions in these accounts often do not align with their stated purpose, prompting the RBI to urge banks to report such activities to the Enforcement Directorate (ED).
Furthermore, the circular emphasised the need for enhanced vigilance to prevent the misuse of banking channels for unauthorised forex trading. AD Cat-I banks were advised to exercise greater caution and vigilance in identifying and reporting accounts facilitating unauthorised forex trading to the Directorate of Enforcement for further action.
The RBI also directed banks to educate customers on dealing only with authorised persons and entities and to publicise the list of authorised persons and entities available on the RBI website. Additionally, banks were instructed to promote awareness of the 'Alert List' and press releases issued by the RBI, which identify entities involved in promoting unauthorised forex trading activities.
The RBI emphasised that its 'Alert List' contains names of entities, platforms and websites suspected of promoting unauthorised entities and electronic trading platforms (ETPs). However, it cautioned that the list may not be exhaustive and individuals should verify the authorisation status of any person or ETP from the RBI's official lists.
Overall, the RBI's circular underscores the importance of exercising caution and due diligence to prevent unauthorised forex trading activities, ensuring the integrity and security of the banking system.
