The legality of Forex trading in India is still a big question, and many Indian investors are still looking for answers.
If you are trading Forex in India through exchanges like the National Stock Exchange (NSE) and Metropolitan Stock Exchange of India (MSE), and you are only trading with pairs against the Indian Rupee, then you are doing it legally.
Who regulates Forex Trading in India?
The Reserve Bank of India (RBI) and Securities Exchange Board of India regulate Forex trading in the country. The reason why RBI and SEBI restrict its citizens into trading Forex is to protect them from losing big money, while some reports reveal that it is to prevent currency outflow.
Why many Indians still trade Forex with offshore Forex brokers?
As mentioned above, information on the legality of Forex trading in India is still not known to the majority. Many Indians trade with Forex brokers at their own risk, mainly due to the fact that Forex trading offers great financial growth opportunity. (see The 4 Golden Rules to Successful Forex Trading)
For them to trade Forex, they have to convert the INR to their desired currency. In the past few years, the RBI has calmed its rules in foreign exchange. It has allowed every Indian to exchange rupees for up to $250,000 per year without giving the central bank a justification. And because it’s illegal to send money out of India for Forex trading through bank accounts, many have settled to online payment systems such as Skrill and Neteller.
Questions still need to be answered on the legality of Forex trading in India. One thing is for sure though, people from this country are looking for financial independence and trading in the Forex market can give that to them. As the Indian government and RBI are having the leverage on trading, there are