Sir, Well, read a lot about about the illegality of Forex trading in India. The risks arise from many sources. When Oil prices were rising it was the speculators who caused the problem. And those who have limited capital can make use of it. For a company the minimum bank balance is about sgd above. I want to trade with fxcm and Want to deposit fund via debit card, but I came to know that forex trading is illegal in India, So can I transfer fund from debit card to fxcm. How much in advance one can buy foreign exchange for travel abroad?
The Reserve Bank of India had Issued the guidelines to all residents, non residents and foreigners for purchasing, surrendering foreign exchange. RBI (Reserve Bank of India) is the central bank of the india and that has the authority to issue guidelines regarding the Foreign Exchange Transaction.
Bringing in and taking out of Foreign Exchange
However, many India citizens believe that the main reason is to stop the currency outflow. It is believed that RBI will ease in their limits in the coming period as India is going through the financial change.
Thus Forex trading is legal in India, if it includes INR to be either the base currency or the quote currency, however trading in market requires you to stay alert and updated.
In India, Foreign Exchange or Forex trading is not allowed. Hence it is legally a crime to involve in Forex trading and the charges of the crime are imprisonment in jail in this country. The offense is considered immense, the prediction of intensity can be deduced from this fact that it has been labeled to be non-bailable.
However, there are legal ways to trade: As per RBI guideline, all Indian resident including banks and financial institutions can do forex trading in currency pairs. So, if you are trading with brokers who have membership in mention exchange it is absolutely legal. How to do Forex Trading in India? This page may be out of date. Save your draft before refreshing this page. Submit any pending changes before refreshing this page. Ask New Question Sign In. Is Forex trading legal in India?
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Is it worth trading forex in India? How can I legally start forex trading in India? How is forex trading in India? Is it illegal in India? Apart from that trading in overseas market in margin trading segment is illegal for Retail Clients. Thank you for your feedback! Increase your influence by creating a video course on Udemy. Reach over 24M people around the globe!
Monetize your content in the topic and language of your choice. Start Now at udemy. Is Forex trading illegal in India? As per FEMA, all these trades are illegal trades. Collection of margin for such online portals is also a contravention of FEMA While data on how much volume of trade is routed to Internet trading portals offering forex trading are not available, the trend seems to have caught on.
As the RBI has observed, many Indian residents have fallen prey to tempting offers and lost money heavily. Attracted by the lure of handsome returns, the very high leverage offered bets as high as times or more allowed on the margin , and several currency pairs to trade on many entities offer as many as 52 pairs , a lot of traders seem to have tested their luck in the overseas currency market, not always with good results.
The risks arise from many sources. The global currency market is arguably the largest and among the most sophisticated in the world. The high leverage too acts a double-edged sword. While it has the potential to multiply profits, it magnifies losses. There is also the conversion risk and cost, and commission charge which Indian residents incur when converting rupees to foreign currency and vice-versa. Finally, there is counterparty risk to the Indian trader — the danger that the party at the other end may not honour its commitment.
Most companies offering overseas currency trades execute their trades not on regulated exchanges where trade settlement is guaranteed but in the riskier over-the-counter OTC market. They almost always operate in the OTC market. Indian residents who find themselves short-changed may have little or no recourse to have their grievances addressed. Remedies, even when available, could be expensive to implement and be a long-drawn process.
With the legal and operational risks involved in overseas currency trade, resident Indians who have the know-how and want to benefit from forex movements should trade in the exchange traded currency derivatives available in the country. Want deals to magically come to you when shopping online? Download the free Genie shopping plug-in. It grants savings whenever they're available, like magic! Learn More at retailmenot. There are many companies who are dealing in foreign currency trading operated from india illegally.
Legal route of doing forex trading in India is only register dealer. You can do forex trading with the help of registered sebi dealer. Authorized dealers list can be found from sebi website http: You should beware of fake dealers who claim high return of your forex investment money.
Their only intention is to get money form 10 to 15 investors and fund away by making fool. In this way, all the investor may have to suffer loses. You have seen many advertisement of forex trading that claim very good return on investment. These advertisements create temptation in MIMD of investors.
Then, many people investors invest in forex trading without having of knowledge of it. They find themselves trapped into a big losses schemes. This leads to them at a conclusion that forex trading is a scam.
It is not true. If you good knowledge of investment , then you earn high return. Money does not grow at tree. If you are looking for a way to become rich overnight, then forex trading is not for you. However, it does not that you cannot earn high return in forex trading. It is totally depends on the knowledge of investors, how he can use his mind in investment. It is one of the biggest myth of forex trading.
You should think twice before investing your hard earned money. There is equal risk in forex trading as other investment instrument has. They have to suffer loses. These are the people who began to think that forex trading is a scam due to losses. They have to make effort in right direction to understand the market. Now, it is clear that forex trading does not provide sure return. You have to make some efforts like other business. Today, you can see large number of online website that claim forex trading with approved RBI registration.
You should beware of such kind of websites. According to RBI circular no. It mean transfer money to a forex trading account with a broker who live abroad is violation of FEMA, Now, the question arises why it is illegal? As per the rbi guidelines indian citizen cannot send directly or indirectly fund to outside india for margin trading purpose.
In order to compensate the losses rbi will purchased more dollar from the market by selling inr in cheap rates. Thus, leads to devaluation of our inr. Rbi also noticed that there are many companies in india who advertised through electronic and internet portals offering trading or investing in foreign exchange with guaranteed high returns.
There are also many agents in india who worked for these companies and collect payments from them so as to transfer their funds outside india through illegal route and also offer their clients lucrative returns. Also exporters in india can do forex trading but for hedging purpose as their profits mainly depend on currency movement.
You can trade in forex currency which is denominated in inr means which is paired with inr. Let us see the rules and regulation of derivative.
The framework of doing trading in forex derivative is set by sebi and rbi.
Frequently Asked Questions
Forex Trading in India – Rules and Procedures. So now that we understand that trading in only forex derivatives is permitted by the Indian law let us get an overview about the rules and procedures that govern this trade in India. RBI Rules & Regulations – Foreign Exchange Services Purpose of Resident Indian Proceeding for Request cum FEMA Declaration form for release of exchange by filling the Guidelines while allowing the facility If the applicant is an existing account. Mar 11, · The Reserve Bank of India and Securities Exchange Board of India regulate the forex trading in India. It is legal in India if the base currency is INR only, if the forex trade is taking place between two foreign currencies, it is illegal.