RBI tightens regulatory noose on use of cards for overseas forex trading

RBI tightens regulatory noose for overseas forex trading
Reserve Bank of India (RBI) on Tuesday said banks offering credit cards or online banking facilities to their customers should not allow customers remit payments directly /indirectly outside India in any form towards overseas foreign exchange trading through electronic/internet trading portals.

RBI said banks should advise their customers that they would be liable to be proceeded against for contravention of the Foreign Exchange Management Act (FEMA), 1999 besides being liable for violation of regulations relating to Know Your Customer (KYC) norms / Anti Money Laundering (AML) standards.

"It has been observed that some banking customers continue to undertake online trading in foreign exchange on portals / websites offering such schemes wherein they initially remit funds from Indian bank accounts using credit cards or other electronic channels to overseas websites / entities and subsequently receive cash refunds from the same overseas entities into their credit card or bank accounts," said RBI in a statement.

Dion Global Solutions Ltd.

Story first published: Wednesday, September 18, 2013, 9:10 [IST]
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