Few days back I received a message from a company representative on Facebook, forcing me to offer the “INTERNATIONAL BUSINESS OPPORTUNITY” called FOREX TRADING to my client. She claimed returns ranges from 8% to 95% within a month. So let us look at this offer whether this is the legal or not.
Forex trading in India is illegal where there is no involvement of Indian Rupee. You can trade with involvement of Indian Rupees like USDINR, EURINR, GBPINR or JPYINR.
The reason for sharing this information with you all is, in future you may be under such trap. So thought to share this information and making you aware about what actually are Indian regulations about this Forex Trading. Below is the interesting discussion. (Name of executive and Company she represents changed.)
Company Executive-Hello sir, I am Shilpa here. Working for a Multi National Company named ABC Consultant. I got to know that you are the financial planner, so I wanted to discuss with you business proposal regarding international Commodity and currency trading!!
The profits you earn is in Dollars and the returns ranges from 8% to 95% within a month. This is the only industry where you can earn huge profits in short terms.
I will be looking forward for your reply sir!
Basavaraj-oh sure…let us start now
Company Executive-Can you please send me your contact number so that I can call you up and explain the overall picture of ABC.
Basavaraj-Let us discuss first the regulatory issue…. Under which regulation this trading will be performed?
Company Executive-we are group company of the ABC International Consortium (HIC), ABC is a registered member of the Indonesia Regulatory Agency.
Further ABC is also registered with : BAPPEBTI Member of The Indonesian Derivatives Clearing House Member of Jakarta Futures Exchange Member of the Commodity Trading Board With sanctions obtained for Overseas Transactions, HIF we can now offer our clients a broader spectrum of trading and investment opportunities.
Basavaraj-I am asking you, to operate in India under which regulation you are registered? Who regulates the trade generated in India? Forget about the Indonesia or other countries, I am living in India and let us discuss who bonds these transactions?
Company Executive-Sir we have our headquarters in Jakarta, so we are directly regulated by the exchange.
Resident Indians can trade in currency through various Indian financial institutions today However, currently the resident Indians cannot trade in currency pairs not involving the Indian Rupee, (like the USD/GBP) with any scheduled bank or such other agency falling under the regulatory purview of the Reserve Bank of India Therefore to trade in such currency pairs, one will have to transact Foreign Exchange trades outside India.
Basavaraj-Jakarta is ok…but money is going to be invested from India…. and you are claiming that you have an office in India. So ultimately you will come under regulatory. So who regulate you people? Or in future my transactions?
Company Executive-RBI, through the provisions under A.P.(Dir Series)Circular No.64 dated Feb 4,2004, Circular No.24 dated Dec 20,2006, Circular No.51 dated May 8,2007, Circular No.9 dated Sept 26,2007 and Circular No.05 /2009-10 dated July 1, 2009 granted permission to Resident Individuals to freely remit up to USD 200,000 per calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India without prior approval of the Reserve Bank of India. Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of the Reserve Bank.
Basavaraj-so you are claiming to be no one will regulate and according to the law of land this is not legal right?
Company Executive-It is legal, we are doing CFD i.e., contract for difference In India forex is Not legal but not CFD We bid and ask only for the price difference
Basavaraj-From the above reply of “Resident Individuals to freely remit up to USD 200,000 per calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India without prior approval of the Reserve Bank of India” foreign currency exchange is missing…Can you please elaborate on this? So you’re agreeing that forex trading in India is not legal right?
Company Executive-yeah!! We are into CFD’s. Not forex trading.
Basavaraj-again….is this CFD legal? Under whose regulation you do this trading? Hope this link will be an eye opener for you personally
Company Executive -no it is legal. We are trading under the instructions of BAPPEBTI (ITS LIKE SEBI in India) . And we have our regulated by the Jakarta Futures Exchange.
Basavaraj-I need Indian regulator not Jakarta or any other unregulated country source. If any issue with your company, default from opposite party or some other technical issue then you mean to say that I need to approach Jakarta Future Exchange or BAPPEBTI?
Simply to say….you knocked the wrong door…sorry
Company Executive-Sir in India whatever traded you take, when you punch the order it goes to Bombay stock exchange and you need not to go to Bombay to trade. So same here we are directly member of Jakarta.
Basavaraj-Agree….I am asking if I need to sue your company or default to my trade then whom I need to approach? Jakarta regulator?
Company Executive-As of now such things have not happened. We are registered in India, we have physical offices in Bangalore, whatever queries you have can consult here only.
Basavaraj-You might have registered as a company but are you registered as a broker with SEBI? Also what guarantee you provide that nothing will happen in future if not happened in the past
Company Executive-We are nothing to do with the Indian market, we are in International market, so we need not to report to SEBI. In fact RBI and SEBI have to report to BAPPEBTI. So we are directly member of that. Tomorrow even if the Harvest is not there BAPPEBTI will give you 2 options like to continue the trading with other broker or you can withdraw the whole amount.
Basavaraj-Oh is it? I don’t know this that RBI and SEBI will come under BAPPEBTI? Can you provide the proof of this claim?
Company Executive-You will get two copies of documentation from Jakarta so everything will be in the documentation.
Basavaraj-I am not asking the documentation…. Please first clear my doubt about the regulator. You said RBI and SEBI will come under BAPPEBTI…..so provide me proof then I will be your first customer
Company Executive-RBI and SEBI related to India, but BAPPEBTI is Asian regulatory body. RBI has given permission that Resident Individuals to freely remit up to USD 200,000 per(now it is revised to75,000$) calendar year for acquiring and hold immovable property, to invest in stocks, shares, exchange traded funds, debt instruments, stock options and index options outside India. Anything above that we have to ask the permission from RBI.
Basavaraj-But in above lines where they included forex trading? Is BAPPEBTI is regulating the whole Asia? Are so can you provide the proof?
FINALLY…NO ANSWER FROM OPPOSITE SIDE 🙂
Below are a few links which make sure that the forex trading in India not involving Indian Rupee is illegal.
A complete list of FAQs Forex Facilities for Residents (Individuals) by RBI (last updated on September 30th 2013).
Hope above links will be providing us a clear indication that such trading using online platform is illegal. But I have doubt about the above-said company, from whose representative I got a call is from Bangalore and how they are so openly offering without fear of regulations. Get up regulators !!! Don’t act lately like what you did with Sahara, Harshad Mehta, Stock Guru India or Saradha Chit Fund.