Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

RBI takes strict measure on Illegal Forex and CFD trading

49 sec read

Mumbai: The RBI cracked down on offshore foreign exchange trading by Indians through online trading websites, asking banks to report any such remittances to the regulator. Marketcalls already had a earlier post on the legality of International forex trading and CFD trading in India.

In a circular issued late on Tuesday, the Reserve Bank of India (RBI) asked banks to advise customers not to undertake forex trading on foreign websites that offer currency contracts by accepting margins through credit card and online money transfer mechanisms.

The RBI also asked banks to close the credit card or online bank account of a customer that is found to be in violation of the rule.Here is the link to RBI circular on Overseas forex trading through electronic / internet trading portals

The rupee has been hard hit in this summer’s rout of emerging currencies, losing around 20 per cent 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 financial year.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in)

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53 Replies to “RBI takes strict measure on Illegal Forex and CFD…”

    1. This is a very stupid move. Our country imposes unnecessary restrictions on free movement of capital and the free market at every turn. So much for living in a free land.
      Here we have citizens applauding such moves as well. What if a trader makes money in the forex market. Does it not help our revenue? Are you going to just ban imports to “boost” our currency?
      If we’re going to be a mature economy that plays a role in the global economy, we need to embrace free trade. Almost every country in the world allows forex (other some really useless countries). India has a GDP that’s in the top 10 and we’re still being protectionist like we’re in the 1950’s.

      1. Agree 100%…I was surprised to read other answers as it’s a great move by RBI. If you don’t float your currency then what is the point of having the 5th Largest economy and you have to put blockade to keep outflow of USD?
        Actually it’s a bad move…

  1. What if someone is already transferred, if they want to stop and how do they get it back into their bank /credit card account ?

  2. Why the hell govt. only tries to ban this particular trading to save rupee, a lot of useless policies are there and foreign products sold in India are the biggest reason for the depreciation of the rupee. why not work on that.
    Why Govt. don’t take some positive steps and procedures to allow forex trading, when almost whole world is trading it.
    Govt. could allow offshore brokers to work in India under the guidelines of RBI and SEBI and taking deposits in rupee, they can work like offshore companies are working here paying tax to the government. or they can allow Indian brokers to do the same. Our govt. just look for excuses not for solutions

  3. @Suds, the reason is simple, you are not involving govt in these type of transactions, so all the profit ( if you are making ) goes to you and govt gets nothing. Similarly all foreign goods being sold out in India are being taxed heavily.

    1. Not if they legalize it as short term capital gains. Govt gets a cut and everyone is happy. Do you think people care less about losing THEIR OWN money than the govt of India? Lol, RBI is stupid.

  4. Sir , Is bitcoin trading considered legal in India or even that is considerred illegal like forex trading ?? I would highly appreciate if U answer my query

  5. Hello Rajandran
    what will happen when anybody use EEFC ac with authorized dealer ( exchange earner foreign currency account ) bcoz this is legal ac to hold foreign currency & have very stringent norms for currency utilization.Also u can pay income tax to govt whatever gain u have made on basis of this ac.

  6. can i remit money to U.S for tradingin commodity futures such as gold & crude on Chicago Mercantile exchange?

    1. If you are indian retail trader then you are not allowed to trade in overseas margin trading segments. However it is allowed to trade in cash market and taking naked longs/puts. However shorting options are not allowed as it require margins once again.

  7. Hello Rajendra, Good work.
    I need small confirmation from you – I am working as a freelancer for European company and the company wants to pay me through neteller/skrill/paypal.

    Is it ok to recevie funds to those account and then to my bank account?

    1. Freelancing is not related to Forex Trading. You have to be concerned only if you are trading in Overseas Margin Trading/CFD Trading/Spread Betting. Freelancing and Getting Money via neteller/skrill/paypal to your Indian Bank Account is completely legal.

  8. Hi Rajendra.
    I have a relative in US who has an account in ICM TRADING which is based in Anguilla….Since I am successfully trading in mcx India in my account he wants I should trade into his ICM account and he will remit me share in profit…will that be legal to recreive money from him as fee into m my Indian bank account.

  9. Guys if you want to trade in forex just do it I am trading in it successfully for 4 years now I finally quit my stupid day job, if you are a day trader you just cant trade in Indian markets there is no volatility and movement in prices in any of the instruments listed in NSE if you want to make a decent amount of money you have to invest a lot and the returns are not that high, if you keep following all the rules that the governments set you will get nowhere in life the govt wants you to be poor so that you can vote them back to power thats why they formulate these stupid rules which makes no sense at all and the politicians take all your taxes and put them in their pocket, its time you think about yourself because if you think that the govt will improve your situation then best of Luck.

  10. Its absolutely fine,im trading in forex from last 5 years and have earned almost $1000000+.Without a single problem.but i recommand to use skrill for both deposists and withdrawals.but also be wise to pay out your taxes regularly and wisely reply to the source of the income

  11. Never delay the tax,and its depends on your skills and talent how you show out your source of income while filing incometax returns

  12. Hi sir. I opened an forex trading account with ‘forex4money’ and i get my first withdrawal amount..but they are trading with EURO/USD, GBP/USD,USD/JPY,AUD/USD and XAU/USD pairs..They always supported through voice calls…and they have 24 hr custoner services…Money deposited Through SBI account in the name of Forex4money….and get my withdrawal through my account from same….is this legal or not…pls help me..I already recommended for my friends…

      1. Mr. rajandran,

        Can one trade cryptocurrencies on offshore trading platform? cex.io offers cryptocurrencies using credit cards and bank wire transfer. Is that also considered forex?

  13. Hlo Mrs rajandran sir
    Iam trading in forex only in xau USD gold from past 8 to 10 years only in one pair I have gone thru hell in beginning huge loss and loss but not quite as every time I loose I learned a lesson no i can proudly say that Iam in profit with good knowledge of gold I always take hint of geopolitic and us market now the thing is we’re should we go if rbi is not allowing us to make money what we have experience in field who we should blame if govt allows fdi 100% they come here make money why we can’t why our govt abolish own people
    U say trade in Indian market ok with wat margin and leverage put 50k in trading account and take penny how fair is that
    If I deposited 1000$ in forex I will make 2000 in just 30 days that my ablity
    Plz answer

  14. What if I’m using my NETELLER e-wallet in rupees and loading money to NETELLER from my Debit card..and everything is done in rupees only

  15. We are having some queries as our business planning is attracting foreign transactions so better
    we stay informed. We kindly request you to answer following queries
    1. We wish to inquire whether we can take fees/charges in our account and how do open an
    account wherein we can make international transaction
    2. What are the rules for opening forex trading training institute and additionally forex trading
    3. What rules and certification do we require to give forex trading assistance through call/SMS to
    foreign clients?
    4. What authority governs the Forex Trading
    5. Is forex advisory legal in India? Keeping Indian Nationales’ including or excluding?

    Requesting you to guide us and help in the aforesaid matter.

  16. Hi Rajendran. I am trading in CFDs via Iforex. Is it legal to do or is there any legal issue?

  17. hello rajendran sir,
    I have a question that,forex trading is illegal i know,but my question is i transfer some money to my friend via skrill to foreign country.and my friend do forex trade for me and send the profit back to my skrill and can i withdraw profit to my bank?is there any issues from RBI to face?, there is no direct contact with trading brokers,is that legal or illegal?
    Please reply me sir,

  18. I do trading via Iforex and deposit and receive money through credit card.Last week bank blocked my card and cancelled.I read its criminal office.Now what is further concequences, now bank will complain to RBI or this matter is closed by cancelled my card.

  19. Sir I have recently opened demat account in interactive brokers I want to trade us stock options so is it legal to trade those foreign derivative instrument s from India .

  20. I am working as a trader (contractor) for my foreign client. I am not using my own money. All the trading capital is from my client and I trade for him. I receive share of profits if I trade successfully. Is there any problem with this?

  21. Guys, get an NRE account and transfer it to whereever you want, even overseas accounts… get paid from forex…. no issues… no taxes…. and the tax will get for other country where you stay… this is what we say, at least need some good educational qualifications to those who rule

  22. I opened account with forex agent and deposited in Indian rpees the value of $100. Trading has to start. have I done illegal operation. should I go for trading daily or not.

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