Is Forex Trading in India legal from Alpari india ?
- Thread starter Raj_sachdev
- Start date
friends i try to contact alpari via this mail.... pls read my mail to alpari. lets hope for good solution as i suggest. Friends if anybody thinks like me pls mail to alpari n appreciate my idea so that they can follow this n we can trade forex legally....Here is the mail. Also friends share reply from alpari.
To,
Alpari (uk)
Alpari (india)
Subject: Simple and effective suggestion about Expansion of Alpari Fx trading in India.
Respected sir!
As all our world knows that India yet having great potential for any type of business, because of the huge crowded intelligent & efficient people. Indian stock markets and economy are going to touch new sky high day by day. Many of the youngsters are interested in forex trading significantly. But due to very much conservative Indian Government policies for forex market, larger number of clients are unable to trade forex legally. Because as per RBI ( Reserve Bank Of India)'s foreign exchange rules its illegal to trade currencies in fx market.
India has a rather strict foreign currency exchange policy - even though many liberalization measures have been taken recently, it's still an economically isolated, or highly protected country. Indian currency - rupee, is highly regulated by the national banking authority - Reserve Bank of India, and so Indian citizens still cannot freely exchange rupee to other currencies, they have to prove their need and there are annual limits for different needs. Even popular money transfer systems such as wire transfer is big headache to answer different types of suspected questions from Bank side.
My last point is about the Income tax. While file IT return it's mandatory to produce income statement or proof of income. If anyone show the income from Fx trading again Big question is How , When , Why and many more questions about remittance of INR.
Just i want to tell Alpari that REMITTANCE OF INDIAN RUPEE FOR FOREX TRADING IS ILLEGAL IN INDIA BUT RECEIVING OF INCOME IS NOT BANNED.
So my suggestion is----
Alpari can build large numbers of efficient clients in India and can harvest potential fx market in India. Alpari should OFFER MINIMUM $50-100 USD FREE CREDIT FOR ALL NEW ACCOUNT OPENINGS. Alpari can deduct/ debit this amount from the profit of a client OR/Also can set Condition of minimum account balance 500 to 1000 USD. It means client can be able to withdraw his extra profit with maintaining minimum account balance.
This is all i want to express. Forgive me if Alpari thinks its childish idea. Thanks Alpari for reading my long mail.
Regards...
(Awaiting for Reply)
Dr. Devdas Chandewar
To,
Alpari (uk)
Alpari (india)
Subject: Simple and effective suggestion about Expansion of Alpari Fx trading in India.
Respected sir!
As all our world knows that India yet having great potential for any type of business, because of the huge crowded intelligent & efficient people. Indian stock markets and economy are going to touch new sky high day by day. Many of the youngsters are interested in forex trading significantly. But due to very much conservative Indian Government policies for forex market, larger number of clients are unable to trade forex legally. Because as per RBI ( Reserve Bank Of India)'s foreign exchange rules its illegal to trade currencies in fx market.
India has a rather strict foreign currency exchange policy - even though many liberalization measures have been taken recently, it's still an economically isolated, or highly protected country. Indian currency - rupee, is highly regulated by the national banking authority - Reserve Bank of India, and so Indian citizens still cannot freely exchange rupee to other currencies, they have to prove their need and there are annual limits for different needs. Even popular money transfer systems such as wire transfer is big headache to answer different types of suspected questions from Bank side.
My last point is about the Income tax. While file IT return it's mandatory to produce income statement or proof of income. If anyone show the income from Fx trading again Big question is How , When , Why and many more questions about remittance of INR.
Just i want to tell Alpari that REMITTANCE OF INDIAN RUPEE FOR FOREX TRADING IS ILLEGAL IN INDIA BUT RECEIVING OF INCOME IS NOT BANNED.
So my suggestion is----
Alpari can build large numbers of efficient clients in India and can harvest potential fx market in India. Alpari should OFFER MINIMUM $50-100 USD FREE CREDIT FOR ALL NEW ACCOUNT OPENINGS. Alpari can deduct/ debit this amount from the profit of a client OR/Also can set Condition of minimum account balance 500 to 1000 USD. It means client can be able to withdraw his extra profit with maintaining minimum account balance.
This is all i want to express. Forgive me if Alpari thinks its childish idea. Thanks Alpari for reading my long mail.
Regards...
(Awaiting for Reply)
Dr. Devdas Chandewar
Folks.. I am not against forex trading or any trader.
FOREX trading cannot be done from INDIA. This is as per the circular by RBI..
There is no point in saying that it is legal and applicable only for using LRS.
Lemme ask you, when you do a wire transfer or through cc to your broker what that is called. what do you claim that Deposit?
FOREX trading cannot be done from INDIA. This is as per the circular by RBI..
There is no point in saying that it is legal and applicable only for using LRS.
Lemme ask you, when you do a wire transfer or through cc to your broker what that is called. what do you claim that Deposit?
RBI provides two methods to remit funds abroad. Form A1 which is related to imports and Form A2 which is related to other than imports.
LRS or Libralized remittance Scheme allows Indians to remit funds abroad under A2, for purposes qualified under A2 and mentioned on the bavk of the form. One of the purposes is Investment abroad, which is the case here.
However, it is implicit that you will declare the outgo, because there is no column in the form that says future or possible libilities arising from this LRS investment.
Now, supposing you have used the full LRS amount to fund your FX trading account and traded leveraged and lost...lets say three times the amount....you have created an ooutgo requirement for forex which is over & above what is allowed under LRS. This is why leveraging is not allwed under LRS.
Second example is you have you have utilized 10% of LRS quota and lost three times that. You simply misdeclare further funds and remit them for the stated purpose of investment, whereas you are sending them for the purpose of fullfilling a loan....which is technically an offence & procecutable under FEMA.
Issue is, though the Remittance of funds abroad has been libralized, loans from foreigners or foreign entities has not been. A loan from a foreign entity is called ECB or Eternal Commercial Borrrowing. This is used by large corporates like RIL, Tatas to raise cheap loans abroad. This route requires explicit permission from RBI...there is a defined procedure & forms etc.
The problem is there is no size definition of ECB. I borrow 100$...its ECB...RIL borrows a billion...its ECB.
You may remit under LRS, till you have not traded under margin & your intention is not to use margin, its legal. After that if you use margin your offence starts. As long as you don't lose, there is only a technical illegality, though still maybe fined upto three times the remittance or three times the turnover...no jails whichever way the camel sits
On the other hand you lose and further remit under LRS by way of misdeclaration...boss...you have the misdeclaration intention as well...so be prepared for the highest possible fines..and no leniancy...though still no jails as FEMA specifies three times fine max...does not say on what...illegitimate remittance or illegitimate usage....so the camel may still sit either side and this has yet to be tested by courts.though RBI has imposed three times the turnover fine and people have challanged it...several cases are pending!!
If anyone says that a route other than LRS is available, it obviously means with specific application to RBI....definitely not without specific permission citing previous clearance. This is not something that will be cleared by the banker under general powers granted to him by the RBI.
Under current laws, as far as I know (and I am an exporter/importer dealing with RBI issues everyday) there is no way an Indian resident can create a liability for himself, without specific permission for RBI. If you know otherwise, just cite the rule number & form and I will post a confirmation from my forex bankers within 24 hours, with copy of relevant rules & forms.
That said...India is very relaxed nowadays...nobody is bothered about small hares jumping over litte wire fences, unless entire groups start jumping herdlike...in such case examples will have to be set and law does not discriminate between big & small hares....it prosecutes both equally...its another matter the big hares have ways to escape, not offered to little hares.
LRS or Libralized remittance Scheme allows Indians to remit funds abroad under A2, for purposes qualified under A2 and mentioned on the bavk of the form. One of the purposes is Investment abroad, which is the case here.
However, it is implicit that you will declare the outgo, because there is no column in the form that says future or possible libilities arising from this LRS investment.
Now, supposing you have used the full LRS amount to fund your FX trading account and traded leveraged and lost...lets say three times the amount....you have created an ooutgo requirement for forex which is over & above what is allowed under LRS. This is why leveraging is not allwed under LRS.
Second example is you have you have utilized 10% of LRS quota and lost three times that. You simply misdeclare further funds and remit them for the stated purpose of investment, whereas you are sending them for the purpose of fullfilling a loan....which is technically an offence & procecutable under FEMA.
Issue is, though the Remittance of funds abroad has been libralized, loans from foreigners or foreign entities has not been. A loan from a foreign entity is called ECB or Eternal Commercial Borrrowing. This is used by large corporates like RIL, Tatas to raise cheap loans abroad. This route requires explicit permission from RBI...there is a defined procedure & forms etc.
The problem is there is no size definition of ECB. I borrow 100$...its ECB...RIL borrows a billion...its ECB.
You may remit under LRS, till you have not traded under margin & your intention is not to use margin, its legal. After that if you use margin your offence starts. As long as you don't lose, there is only a technical illegality, though still maybe fined upto three times the remittance or three times the turnover...no jails whichever way the camel sits
On the other hand you lose and further remit under LRS by way of misdeclaration...boss...you have the misdeclaration intention as well...so be prepared for the highest possible fines..and no leniancy...though still no jails as FEMA specifies three times fine max...does not say on what...illegitimate remittance or illegitimate usage....so the camel may still sit either side and this has yet to be tested by courts.though RBI has imposed three times the turnover fine and people have challanged it...several cases are pending!!
If anyone says that a route other than LRS is available, it obviously means with specific application to RBI....definitely not without specific permission citing previous clearance. This is not something that will be cleared by the banker under general powers granted to him by the RBI.
Under current laws, as far as I know (and I am an exporter/importer dealing with RBI issues everyday) there is no way an Indian resident can create a liability for himself, without specific permission for RBI. If you know otherwise, just cite the rule number & form and I will post a confirmation from my forex bankers within 24 hours, with copy of relevant rules & forms.
That said...India is very relaxed nowadays...nobody is bothered about small hares jumping over litte wire fences, unless entire groups start jumping herdlike...in such case examples will have to be set and law does not discriminate between big & small hares....it prosecutes both equally...its another matter the big hares have ways to escape, not offered to little hares.
Despite all I have said, nothing says RBI will not allow leverage. The law simply says, you cannot do so.
If you have any remittance requirements that do not meet the general exemptions, RBI will give you specific permission. It is not general permission. It is specific to you. Its on your application, documentation etc.
Now the questions RBI has are:
- Do you have professional credentials in the sector (trading) in India?
- Or do you have experience and the documentation to prove it?
- Do you have the funds?
- Are the funds your own? Borrowed funds...brother/sister etc. are not admissible. Its your personal balance sheet which is in question.
- Are you asking for a huge amount? Is it full year's LRS quota equivalent?
- What is the leverage being allowed to you?
- What is the maximum sum of amount you can lose and after deducting the remittance, what is the liability that will have to be met?
- The potential liability, is it within LRS quota?
- What is your financial status to withstand the liability without bankruptcy & having a normal life?
- If the remittance is allowed, is the amount enough to justify cost of submitting quarterly or annual returns to RBI through your banker and are you willing to do so?
Subject to outcomes of such questions being positive and your willing to do a little paperwork, there is no reason RBI would not allow you your just profession.
On the other hand if your are just tired of betting on Indian Cricket and want to try your hand at the Japanese Yen or the auto-earning robot from Mars, the RBI remains committed to protect you from yourself
They are not bad people, guys. Just doing a job no one else wants
If you have any remittance requirements that do not meet the general exemptions, RBI will give you specific permission. It is not general permission. It is specific to you. Its on your application, documentation etc.
Now the questions RBI has are:
- Do you have professional credentials in the sector (trading) in India?
- Or do you have experience and the documentation to prove it?
- Do you have the funds?
- Are the funds your own? Borrowed funds...brother/sister etc. are not admissible. Its your personal balance sheet which is in question.
- Are you asking for a huge amount? Is it full year's LRS quota equivalent?
- What is the leverage being allowed to you?
- What is the maximum sum of amount you can lose and after deducting the remittance, what is the liability that will have to be met?
- The potential liability, is it within LRS quota?
- What is your financial status to withstand the liability without bankruptcy & having a normal life?
- If the remittance is allowed, is the amount enough to justify cost of submitting quarterly or annual returns to RBI through your banker and are you willing to do so?
Subject to outcomes of such questions being positive and your willing to do a little paperwork, there is no reason RBI would not allow you your just profession.
On the other hand if your are just tired of betting on Indian Cricket and want to try your hand at the Japanese Yen or the auto-earning robot from Mars, the RBI remains committed to protect you from yourself
They are not bad people, guys. Just doing a job no one else wants
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