I wanted to know whether Forex Trading is legal in India. There has been lot of discussion about this but there is no definitive answer. Can anyone shed some light on this.
Question
If someone open's up an account with Onada, Fxpro or forex4you, is it legally allowed ?
findvikas (Vikas) Gave an Excellent Answer to this Question:
Source:
http://www.alpari.co.in/en/about_alpari/index.html
Alpari Forex (India) Pvt. Ltd. was formed to promote Forex-trading capability to Indian retail and institutional customers. Individual Indian traders, fund managers and institutional customers will benefit from innovative and proprietary currency-trading technology combined with quality execution, competitive spreads, margins and expert and responsive customer support from our highly professional teams.
Alpari Forex (India) Pvt. Ltd. is a company formed under the Indian Companies Act, 1956. Alpari Forex (India) Pvt. Ltd will be conducting and offering marketing, sales, client services and compliance services in India on behalf of Alpari (UK).
All accounts are opened directly with Alpari (UK), which is authorised and regulated by the Financial Services Authority in the UK.
Alpari Forex (India) Pvt. Ltd is responsible for
new-client acquisition in India. Alpari Forex (India) Pvt. Ltd. will also be registering for membership of Indian currency exchanges including the National Stock Exchange (NSE) and the
Multi Commodity Exchange (MCX) in order to offer
Indian Forex products to its Indian clients.
They have never said that they will be offering SPOT trading if you open account with them. They will give you a UK based account and you have to do Bank Transfer. This again confuse the overall scenario
...but then I went through this document
http://www.finmin.nic.in/the_ministry/dept_eco_affairs/america_canada/fema_acts/index.htm
Look for Section 3 - Capital Account Transactions are "allowed"
Ok... that is fine.. now lets learn about
Capital Account Transactions
Source:
http://www.rbi.org.in/SCRIPTS/BS_FemaNotifications.aspx?Id=155
Look for Section 3 -
Permissible Capital Account Transactions
we are interested in only this part..
transactions, specified in Schedule I, of a person resident In India;
so lets go to schedule I
Ok.. fine so I can invest but what is the mode of payment
that means direct debit to your account via SWIFT transfer or Wire Transfer which is regulated by RBI and big money (if coming) will be sniffed by the RBI watch dogs...
but then there was an amendment to this rule, here
http://www.rbi.org.in/SCRIPTs/BS_FemaNotifications.aspx?Id=1717
Under prohibitions, following items were added...
So as long as you are under the limit of 25K USD per calendar year... which is over INR 12 lakhs ... you should be fine unless a RBI watchdog sniff into your account and want to investigate what is going on..
Hope that makes it clear but still I will file a request to RBI & FEMA and ask for clarifications... does this make this thread a 'sticky' ???
DISCLAIMER : Please go through all the links before making any assumptions and consult with your legal advisory and do not take me as your legal advisor