Can A Resident Indian Individual Undertake Foreign Exchange Transactions?

Resident persons are permitted to undertake forex transactions only with authorised persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA).

Resident persons undertaking forex transactions with unauthorised persons and for purposes other than those permitted under FEMA shall render themselves liable for penal action under the Act.

An authorised person is an entity authorised by the Reserve Bank of India to deal in forex. It can be an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under Sub-Section (1) of Section 10 of FEMA.

Can a resident person undertake forex transactions on internet / electronic trading portals?

Permitted forex transactions executed electronically should be undertaken only on electronic trading platforms (ETPs) authorised for the purpose by the Reserve Bank of India (RBI) or on recognized stock exchanges (National Stock Exchange of India Ltd. (NSE), BSE Ltd. (BSE) and Metropolitan Stock Exchange of India Ltd. (MSE)) as per the terms and conditions specified by RBI from time to time. The list of authorised ETPs is available here. As per FEMA, resident persons are not permitted to undertake forex transactions on unauthorised ETPs.

Resident persons undertaking forex transactions on unauthorised ETPs shall render themselves liable for penal action under FEMA.

What are the permitted purposes for undertaking forex cash, tom and spot transactions?

Forex cash, tom and spot transactions can be undertaken for the purpose of buying/selling foreign exchange for permitted current/capital account transactions.

Courtesy: RBI