Indian The Reserve Bank of India (RBI) on Wednesday asked banks to exercise more vigilance to prevent unauthorized foreign exchange transactions through banking channels and immediately report such cases to ED. The Reserve Bank said in a circular that there have been cases of unauthorized entities providing foreign exchange transaction facilities to Indian residents promising exorbitant profits. “Investigation found that in order to facilitate unauthorized foreign exchange trading, these institutions have resorted to engaging local agents, who are involved in collecting funds for profits, investments, fees, etc., at various bank branches,” the RBI said. Let’s open accounts.
Accounts are opened in the name of people and companies
Top Bank said that these accounts are opened in the name of people, business companies etc. Transactions in such accounts are often not in accordance with the stated purpose of opening the account. The central bank said it was also found that these entities were also providing options to residents to send/deposit funds in rupees and carry out unauthorized foreign exchange transactions using domestic payment systems such as online payments and ‘payment gateways’. The circular addressed to Authorized Dealer Category-I banks (AD Cat-I banks) said there is a need for greater vigilance to prevent misuse of banking channels in facilitating unauthorized forex trading.
Banks need to be more cautious
“Banks are, therefore, advised to be more alert and exercise greater caution in this regard,” RBI said. Whenever AD CAT-I banks come to know of any account being used to facilitate unauthorized foreign exchange trading, they should inform the ED, Government of India as appropriate for further action.” The central bank has directed AD CAT -I Bank also advised its customers to transact in foreign currency only with “Authorized Persons” and “Authorized ETPs”.
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