RBI clamps down on fictitious foreign companies

NEW DELHI: The Reserve Bank of India on Wednesday clamped down on foreign entities, who are cheating people by promising huge sum of money through lotteries and financial assistance to Indian entities.

"It has come to the notice of the RBI that certain foreign individuals and entities, including Indians acting as their representatives, are making offers of huge money through letters or e-mails to residents in the garb of helping individuals or schools and hospitals in their business development," the RBI said in a release.

"Once a response is received, a request either for opening of foreign currency account or seeking details of bank accounts or asking some small amount as initial deposit is made, so that the offer money can be transferred," it said.

The RBI cautioned people not to fall prey to such fictitious offers or become a victim of such foul play.

Referring to Foreign Exchange Management Act that prohibits remittance in any form for participating in lottery schemes, the RBI said the restrictions are also applicable to remittances for participation in lottery like schemes such as money circulation schemes or remittances for securing prize money and awards.

The central bank also banned remittances in foreign currency for purchasing websites or any other schemes offering earnings in US dollar or any other foreign currency on incremental basis, depending on the number of new clients added to the chain, thus making operation of such schemes akin to money circulation.