Close accounts using cards for online forex trading: RBI to banks

MUMBAI: RBI today asked banks to close accounts of customers using credit or debit card for online forex trading transactions, which are prohibited.

As and when any bank comes across any prohibited transaction undertaken by its credit card or online banking customer, the bank will immediately close the card or account of the defaulting customer, the Reserve Bank said in a notification.

If it is observed that the bank concerned has failed to carry out the measures as outlined above, RBI may proceed against the defaulting bank, it said.

Some banking customers continue to undertake online trading in foreign exchange on portals or websites offering such schemes wherein they remit funds from Indian bank accounts using credit cards or other electronic channels to overseas websites or entities, the central bank observed.

Subsequently, cash refunds are received from the same overseas entities into their credit card or bank accounts, it added.

Most of the forex trading through portals are done on a margining basis with huge leverage or on an investment basis, where the returns are based on forex trading.

The public is being asked to make the margin payments for such online forex trading transactions through credit cards or deposits in various accounts maintained with banks in India.