• UGI USER
  • Apr 25, 2024
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RBI CAUTIONS AGAINST ILLEGAL FOREX TRADING, ADVISES BANKS AND CUSTOMERS.

Why in the news?

RBI warns against illegal forex trading through unauthorised entities, instructs banks to report to the Enforcement Directorate.

source:ET

About RBI Alert: Unauthorised Forex Trading

  • The Reserve Bank of India (RBI) has issued a cautionary circular to banks and customers regarding unauthorised entities offering forex trading with promises of high returns.
  • These entities engage local agents to open accounts at various bank branches for collecting money towards margin, investment, and charges, facilitating illegal forex trading.
  • Banks are instructed to report such activities to the Enforcement Directorate (ED) and advise customers to engage only with authorised persons for forex transactions, promoting vigilance and caution to prevent misuse of banking channels.
What Is Forex (FX)?

  • Forex (FX) is the global electronic marketplace for trading international currencies and currency derivatives.
  • It operates without a central physical location.
  • The forex market is the largest and most liquid market worldwide.
  • Trillions of dollars are traded daily.

About Enforcement Directorate:

  • The Enforcement Directorate (ED) is a domestic law enforcement and economic intelligence agency in India.
  • It enforces economic laws and combats economic crimes.
  • Originated in 1956 as an “enforcement unit” for Exchange Control Laws violations.
  • Renamed the Enforcement Directorate in 1957.

Nodal Ministry: Department of Revenue, Ministry of Finance.

Objectives: Enforcing FEMA, PMLA, and FEOA to combat economic offences.