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If a bank finds such a transaction, it should inform the Reserve Bank immediately and block the credit card and related accounts of the customer flouting the norms, RBI said. Photo: Pradeep Gaur/Mint (Pradeep Gaur/Mint)
If a bank finds such a transaction, it should inform the Reserve Bank immediately and block the credit card and related accounts of the customer flouting the norms, RBI said. Photo: Pradeep Gaur/Mint
(Pradeep Gaur/Mint)

RBI warns of forex trading through foreign portals

RBI says a person doing forex trading with foreign portals can be punished under anti-money laundering rules

Mumbai: The Reserve Bank of India (RBI) on Tuesday reiterated that any foreign exchange trading outside India by a resident Indian will violate local foreign exchange laws and a person doing such a transaction can be punished under anti-money laundering rules.

There are websites that accept payments through credit cards and allow an individual to bet on currencies. Any profit or loss is settled through the person’s bank account in India.

If a bank finds such a transaction, it should inform RBI immediately and block the credit card and related accounts of the customer flouting the norms, RBI said.

The warning comes after some banks were found facilitating such transactions through credit cards or online transfers.

“If it is observed that the concerned … bank has failed to carry out the measures as outlined above, Reserve Bank of India may proceed against the defaulting bank … and take any action as may be deemed necessary," the central bank of the country said in a statement on its website.

The rupee has been hard hit in this summer’s rout of emerging currencies, losing around 20% of its value against the dollar at one point, and significantly increasing the burden of Indian companies’ dollar debt.

The central bank has been trying to curb the offshore rupee market by asking banks to cut down on overnight positions as well as asking foreign institutional investors to produce documentation from clients in order to hedge their currency risk in the onshore forward markets.

The central bank has already reduced the limit for remittances made by residents to $75,000 from $200,000 per fiscal year.

Reuters contributed to this story.

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