OctaFX India and 33 other Online Forex Trading Platforms Declared illegal by RBI

Recently on September 7th, 2022 RBI issued a circular, In which Apex bank of India declared 34 Online Forex Trading platforms as illegal which includes some famous forex trading platforms such as OctaFC India, Binomo, and Olymp Trade.

According to the Forex Exchange Management Act(FEMA) 1999, the RBI has compiled an "Alert List" of entities that are prohibited from trading in forex. In the circular issued by RBI, these 34 companies are neither allowed to trade in Forex nor allowed to be permitted to run a forex trading platform on their website.

RBI came up with these kinds of circulars in the past, the last one came in February 2022 before that in 2015, and in 2011. RBI clearly mentions that people can only carry forex transactions with authorized individuals on recognized stock exchanges only such as NSE(National Stock Exchange), BSE, or Metropolitan Stock Exchange, or with authorized ETPs only for purposes stated under the FEMA Act.

Legal action will be taken against anyone who conducts forex transactions on platforms other than authorized individuals or ETPs. In addition, RBI has stated that this list is not exhaustive and that companies not included on the list have not been given the green light to conduct such business.

Despite not banning these companies, the RBI has declared trading in them illegal by carrying out the circular because their offices are not in India, and therefore individuals should not remit and deposit money for forex transactions.

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Why RBI declared Forex Trading Platforms illegal?

1.. Lack of Regulation:

Most of the companies that have been declared illegal by RBI don’t have their head office in India. And hence these platforms are not regulated by the Indian Government which increases the risk of fraudulent and swindling practices by these companies.

RBI is responsible to safeguard the interest of the taxpayer which is one of the major reasons that RBI took this step.

2.. Lack of Transparency:

These entities are often looked at suspiciously for carrying out practices that take advantage of people’s greed and make profits at their expense. These companies lure people who are looking for quick money and are driven by greed.

3.. No Direct Benefit to the Government:

RBI illegal listed companies don’t have their offices in India and the government doesn’t get any direct benefit from these companies in terms of taxes hence it becomes easy for the government to take action against such companies in case the government feels there is a lack of transparency in the functioning of such companies.

Know the list of 34 Forex trading platforms illegal in India