I wonder how you could not understand the difference. The Liberalised Remittance Scheme ruling clearly says that the remittance of money for margin trading is not permitted. In that process you are sending (remitting) money to overseas counterparty for margin trading.
Now if any Indian company is offering forex product within the guidelines of RBI then there is no remittance of money to outside India, it will be a simple NEFT or cheque transfer within India. They are two totally different kind of financial transactions governed by different laws.
So as Vijay confirmed from RBI itself, money remitted to overseas exchange or counterparty for margin trading is clearly not permitted under LRS by RBI. But as someone mentioned earlier there are many other ways to do it. Also I haven't heard of any forex trader harresed for illegal remittance yet.
Now if any Indian company is offering forex product within the guidelines of RBI then there is no remittance of money to outside India, it will be a simple NEFT or cheque transfer within India. They are two totally different kind of financial transactions governed by different laws.
So as Vijay confirmed from RBI itself, money remitted to overseas exchange or counterparty for margin trading is clearly not permitted under LRS by RBI. But as someone mentioned earlier there are many other ways to do it. Also I haven't heard of any forex trader harresed for illegal remittance yet.
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No ratings or guidelines have been prescribed under the Liberalised Remittance Scheme of USD 200,000 on the quality of the investment an individual can make. However, the individual investor is expected to exercise due diligence while taking a decision regarding the investments which he or she proposes to make.
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Yes, it's mentioned that margin calls transfers cannot go under LRS, but again - many brokers open you a real account (some even have banking license) where you can make transfers, where you receive interest rate, etc. So, technically speaking, in such case you're remitting money to a foreign account (which is clearly allowed by RBI) and then, then you decide to use part of this amount for trading. This way, technically speaking - you're not breaking any laws.
Also, you can find a NRI friend who can make transfers for you. NRIs are not subject to RBI's limitations.
Also, if you have a foreign bank account - you're also exempt from the RBI limitations.
Anyway, RBI is softening the rules every year and soon the country will be open - it's just required in the modern world.