Hi!
Here is the circular from RBI which does not mention anything about Forex margin funding. This I digged out from the forum:
"Hi friends,
I saw so many debating about legality of forex in India. Just for you informations i personaly visited HDFC bank amd discussed the issue wiuth the manager at Vasai (E) branch. She said after confirmations from her seniors that any one can trade in forex .
She gace me a circular copy of RBI which states that any one can invest up to 25000 USD per year . The copy of the circular can be found on RBi site at
http://rbidocs.rbi.org.in/rdocs/Noti...PDFs/51175.pdf
Please do your own home work about this document.
Hope this will be helpful to those who are intrested in trading forex.
Happy Trading
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI - 400 001
RBI/ 2004/39
A.P. (DIR Series) Circular No. 64 February 4, 2004
To
All Authorised Dealers in Foreign Exchange
Madam/Sirs,
Liberalised Remittance Scheme of USD 25,000 for Resident Individuals
As you are aware, we have been closely monitoring the macro-economic
developments of the country and initiating suitable policy changes in tune with the
changing scenario. As a step towards further simplification and liberalization of the
foreign exchange facilities available to residents, it has been decided that resident
individuals may freely remit upto USD 25,000 per calendar year for any purpose
for which a Scheme has been formulated as detailed below:
2. Eligibility
All resident individuals are eligible to avail of the facility under the scheme. The
facility will not be available to corporates, partnership firms, HUF, Trusts, etc.
3. Purpose
3.1 This facility is available for making remittance up to USD 25,000 per calendar
year for any current or capital account transactions or a combination of both.
3.2 Under this facility, resident individuals will be free to acquire and hold immovable
property or shares or any other asset outside India without prior approval of the Reserve
Bank. Individuals will also be able to open, maintain and hold foreign currency accounts
with a bank outside India for making remittances under the scheme without prior
2
2
approval of Reserve Bank. The foreign currency account may be used for putting
through all transactions connected with or arising from remittances eligible under this
scheme.
3.3 It is further clarified that the facility under the scheme is in addition to those
already available for private travel, business travel, gift remittances, donations, studies,
medical treatment etc as described in Schedule III of Foreign Exchange Management
(Current Account Transactions) Rules, 2000. (Annexure B).
3.4 The remittance facility under the scheme is not available for the following:
i) Remittance for any purpose specifically prohibited under Schedule-I (like
purchase of lottery/sweep stakes, tickets proscribed magazines etc) or any
item restricted under Schedule II of Foreign Exchange Management (Current
Account Transactions) Rules, 2000. (Annexure B).
ii) Remittances made directly or indirectly to Bhutan, Nepal, Mauritius or
Pakistan.
iii) Remittances made directly or indirectly to countries identified by the Financial
Action Task Force (FATF) as non co-operative countries and territories viz
Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria,
Philippines and Ukraine.
iv) Remittances directly or indirectly to those individuals and entities identified as
posing significant risk of committing acts of terrorism as advised separately by
the Reserve Bank to the banks.
4. Remittance Procedure
Requirements to be complied with by the remitter
4.1 To avail of this facility, the individual will have to designate a branch of an AD
through which all the remittances under the scheme will be made.
4.2 The resident individual seeking to make the remittance should furnish an
application letter cum declaration in the format as indicated in AnnexureA regarding
the purpose of the remittance and declaration that the funds belong to the remitter and
will not be used for the purposes as detailed above.
3
3
Requirements to be complied with by the Authorised Dealers
4.3 While allowing the facility to resident individuals, Authorised Dealers are required
to ensure that the "Know Your Customer" Guidelines have been implemented in
respect of these accounts. They should also comply with the Anti-Money Laundering
Rules in force while allowing the facility.
4.4 The applicants should have maintained the bank account with the bank for a
minimum period of one year prior to the remittance. If the applicant seeking to make the
remittance is a new customer of the bank, Authorised Dealers should carry out due
diligence on the opening, operation and maintenance of the account. Further the AD
should obtain bank statement for the previous year from the applicant to satisfy
themselves regarding the source of funds. If such a bank statement is not available,
copies of the latest Income Tax Assessment Order or Return filed by the applicant may
be obtained.
4.5 The AD should ensure that the payment is received out of funds belonging to the
person seeking to make the remittance, by a cheque drawn on the applicant's bank
account or by debit to his account or by Demand Draft / Pay Order.
4.6 Authorised dealer should certify that the remittance is not being made directly or
indirectly by /or to ineligible entities and that the remittances are made in accordance
with the instructions contained herein.
5. Reporting of the transactions
The remittances made under this Scheme will be reported in the R-Return in the
normal course. The ADs may also prepare and keep on record dummy Form A2, in
respect of remittances exceeding USD 5000. Authorised Dealers may arrange to
furnish on a quarterly basis, information on the number of applicants and total amount
remitted to the Chief General Manager, External Payment Division, Foreign Exchange
Department, Reserve Bank of India, Central Office, Mumbai-400001.
6. Necessary amendments to the relevant Foreign Exchange Management
Regulations, 2000 as also the relevant Notifications, issued under FEMA, 1999 are
being issued separately.
4
4
7. Authorised Dealers may bring the contents of this circular to the notice of their
constituents concerned.
8. The directions contained in this circular have been issued under Sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
Grace Koshie
Chief General Manager
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Here is the circular from RBI which does not mention anything about Forex margin funding. This I digged out from the forum:
"Hi friends,
I saw so many debating about legality of forex in India. Just for you informations i personaly visited HDFC bank amd discussed the issue wiuth the manager at Vasai (E) branch. She said after confirmations from her seniors that any one can trade in forex .
She gace me a circular copy of RBI which states that any one can invest up to 25000 USD per year . The copy of the circular can be found on RBi site at
http://rbidocs.rbi.org.in/rdocs/Noti...PDFs/51175.pdf
Please do your own home work about this document.
Hope this will be helpful to those who are intrested in trading forex.
Happy Trading
RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI - 400 001
RBI/ 2004/39
A.P. (DIR Series) Circular No. 64 February 4, 2004
To
All Authorised Dealers in Foreign Exchange
Madam/Sirs,
Liberalised Remittance Scheme of USD 25,000 for Resident Individuals
As you are aware, we have been closely monitoring the macro-economic
developments of the country and initiating suitable policy changes in tune with the
changing scenario. As a step towards further simplification and liberalization of the
foreign exchange facilities available to residents, it has been decided that resident
individuals may freely remit upto USD 25,000 per calendar year for any purpose
for which a Scheme has been formulated as detailed below:
2. Eligibility
All resident individuals are eligible to avail of the facility under the scheme. The
facility will not be available to corporates, partnership firms, HUF, Trusts, etc.
3. Purpose
3.1 This facility is available for making remittance up to USD 25,000 per calendar
year for any current or capital account transactions or a combination of both.
3.2 Under this facility, resident individuals will be free to acquire and hold immovable
property or shares or any other asset outside India without prior approval of the Reserve
Bank. Individuals will also be able to open, maintain and hold foreign currency accounts
with a bank outside India for making remittances under the scheme without prior
2
2
approval of Reserve Bank. The foreign currency account may be used for putting
through all transactions connected with or arising from remittances eligible under this
scheme.
3.3 It is further clarified that the facility under the scheme is in addition to those
already available for private travel, business travel, gift remittances, donations, studies,
medical treatment etc as described in Schedule III of Foreign Exchange Management
(Current Account Transactions) Rules, 2000. (Annexure B).
3.4 The remittance facility under the scheme is not available for the following:
i) Remittance for any purpose specifically prohibited under Schedule-I (like
purchase of lottery/sweep stakes, tickets proscribed magazines etc) or any
item restricted under Schedule II of Foreign Exchange Management (Current
Account Transactions) Rules, 2000. (Annexure B).
ii) Remittances made directly or indirectly to Bhutan, Nepal, Mauritius or
Pakistan.
iii) Remittances made directly or indirectly to countries identified by the Financial
Action Task Force (FATF) as non co-operative countries and territories viz
Cook Islands, Egypt, Guatemala, Indonesia, Myanmar, Nauru, Nigeria,
Philippines and Ukraine.
iv) Remittances directly or indirectly to those individuals and entities identified as
posing significant risk of committing acts of terrorism as advised separately by
the Reserve Bank to the banks.
4. Remittance Procedure
Requirements to be complied with by the remitter
4.1 To avail of this facility, the individual will have to designate a branch of an AD
through which all the remittances under the scheme will be made.
4.2 The resident individual seeking to make the remittance should furnish an
application letter cum declaration in the format as indicated in AnnexureA regarding
the purpose of the remittance and declaration that the funds belong to the remitter and
will not be used for the purposes as detailed above.
3
3
Requirements to be complied with by the Authorised Dealers
4.3 While allowing the facility to resident individuals, Authorised Dealers are required
to ensure that the "Know Your Customer" Guidelines have been implemented in
respect of these accounts. They should also comply with the Anti-Money Laundering
Rules in force while allowing the facility.
4.4 The applicants should have maintained the bank account with the bank for a
minimum period of one year prior to the remittance. If the applicant seeking to make the
remittance is a new customer of the bank, Authorised Dealers should carry out due
diligence on the opening, operation and maintenance of the account. Further the AD
should obtain bank statement for the previous year from the applicant to satisfy
themselves regarding the source of funds. If such a bank statement is not available,
copies of the latest Income Tax Assessment Order or Return filed by the applicant may
be obtained.
4.5 The AD should ensure that the payment is received out of funds belonging to the
person seeking to make the remittance, by a cheque drawn on the applicant's bank
account or by debit to his account or by Demand Draft / Pay Order.
4.6 Authorised dealer should certify that the remittance is not being made directly or
indirectly by /or to ineligible entities and that the remittances are made in accordance
with the instructions contained herein.
5. Reporting of the transactions
The remittances made under this Scheme will be reported in the R-Return in the
normal course. The ADs may also prepare and keep on record dummy Form A2, in
respect of remittances exceeding USD 5000. Authorised Dealers may arrange to
furnish on a quarterly basis, information on the number of applicants and total amount
remitted to the Chief General Manager, External Payment Division, Foreign Exchange
Department, Reserve Bank of India, Central Office, Mumbai-400001.
6. Necessary amendments to the relevant Foreign Exchange Management
Regulations, 2000 as also the relevant Notifications, issued under FEMA, 1999 are
being issued separately.
4
4
7. Authorised Dealers may bring the contents of this circular to the notice of their
constituents concerned.
8. The directions contained in this circular have been issued under Sections 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
Grace Koshie
Chief General Manager
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