Forex is a high risk market. It is not cleared and has always a controversy that forex trading in India is legal or not. If you are interested in opening a Forex account in India, make sure that you really understand the terms and the overall regulation.
Confusion may happen in Indian Forex market because of the confusing policies and principles issued by the RBI (Reserve Bank of India), the central bank in India. There are certain limitations and restrictions about Indian Rupee trading with the other foreign currencies as well as terms for speculative investments.
The Reserve Bank of India (RBI) is very strict about forex trading and they always discourage people to invest this high risk market. But there are many forex broker who helps Indian trader for currency exchange. Here is a complete list of forex brokers who allows forex trading in India.
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The Various Things in Indian Forex Laws and Regulations
The RBI issues some official regulations that really determines and controls the Forex implementation in the country. For example, according to RBI, the allowed amount of money for the transactions and exchanged with the Indian Rupee per person is $200,000 max. There is also a certain regulation stating that speculative purpose shouldn’t be included in the currency exchange transactions. In short, Indian residents may interact in the financial market, especially for currency futures as long as they follow the regulations and limitations posed by the government.
The policies and regulations by the RBI can change from time to time and anyone interested in the Forex exchange should be able to follow it. Otherwise, they are always welcome not to participate in the trading platform.
Moreover, RBI stated that any Forex transactions done through the internet or online trading portals aren’t allowed under the FEMA (Foreign Exchange Management Act) issued in 1999. The Bank has confirmed that such statement is true but with emphasis that the residents aren’t allow trading in overseas Forex market. But they say that Indian residents are allowed to trade in options contracts or currency futures recognized by SEBI (Securities and Exchange Board of India) with a requirement that they should follow to conditions specified and issued by the RBI.
It is advisable that interested people in the Forex trade should only trust the regulated brokerage firms. Despite the confusing terms and regulations by the RBI, you can always follow the rule and guidance to the letter.