Forex Trading Regulation in India

July 3, 2013 8:07 am

forex_regulationForex trading is strictly forbidden in India and any individual who is caught trading in the Forex market will be charged for violating the law. Such illegal activity is usually reported by the Reserve Bank of India, but there are also other institutions which track the online activity of India’s residents, and check if they participate in the Forex market.

Currently, Forex trading is considered a crime and the individuals caught violating this law may even serve jail time depending on several factors which are evaluated by a special bureau.

Keep in mind, that Forex trading is only strictly forbidden for individuals. Corporations can trade on the Forex market, but only if they use free dollars that come from their bank accounts.

This means that the companies can’t convert Indian rupees to dollars in order to finance its Forex trading accounts. Another strict rule that corporations must follow is related with the leverage that Forex brokers offer. According to the law, corporations can’t use a leverage of over 1:10.

Indian Forex Brokers

Internet and electronic foreign trading is forbidden for individuals, because as we mentioned earlier, people caught trading in the Forex market are threatened by jail time. Keep in mind, that Indian ISPs don’t filter traffic to online Forex brokers, so anyone can access the website of a Forex broker and register an account.

However, it is up to each individual to decide if he is ready to risk his freedom by violating the law in order to make some money from Forex trading.

The Reserve Bank of India regularly released statements whose purpose is to remind Indians that Forex trading is prohibited by law. The reason for this is that there are many Forex brokers and other online trading agencies which try to convince people that Forex trading is allowed in India. No matter what you hear or read, you must remember that this sort of business will be forbidden for individuals until the RBI says otherwise.

Individuals who reside in India and are interested in the Forex market must remember that many agents may contact them personally, offering them a chance to take part in the foreign exchange market.

This is usually done by registering different bank accounts in order to give the RBI a false trace and render them unable to track the origin of the money that comes in and out of the account. However, this method rarely works, because the RBI contacted some of the most commercial banks in India, warning them to pay close attention to such accounts and to report them if they find suspicious activity.

Where to Trade

BinaryTribune is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action, Binary Options and Social Trading.

Related