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BUSINESS EYE MAY 03, 2024 | The Indian Eye 38

RBI tells banks to crack down on illegal

forex exchange activities by entities

Reserve Bank also urges the public to exercise utmost caution while using websites or

applications, and parting with their money to any such unauthorized entity

OUR BUREAU Trading Platform (ETP) without ob-
taining prior authorization from the
New Delhi/Mumbai
RBI. Additionally, banks are urged
he Reserve Bank of India to exercise greater vigilance and cau-
(RBI) has issued a directive to tion in this regard.
Tbanks regarding instances of Moreover, banks are advised to
unauthorized forex trading activities inform their customers to engage
by certain entities. RBI has directed in forex transactions only with au-
banks to report to the Directorate of thorized persons and on authorized
Enforcement (ED) of any account ETPs. The RBI has urged banks to
being used to facilitate unauthorized widely publicize the list of autho-
forex trading action. rized persons and authorized ETPs
The RBI has noted that some available on its website.
entities are offering forex trading Meanwhile, the Reserve Bank
facilities to Indian residents, prom- has also urged the public to exercise
ising disproportionate or exorbitant utmost caution while using websites
returns. Upon investigation, it was or applications, and parting with
found that these unauthorized en- their money to any such unautho-
tities engage local agents to open rized entity. Through a release on
accounts at various bank branches Thursday, the central bank asked
to collect money for margin, invest- the public to verify and satisfy them-
ment, and other charges. However, selves that the website or application
the transactions in these accounts do used or the entity they are dealing
not align with the stated purpose for with is authorized to carry out the
opening them. activity it performs.
“The Reserve Bank of India RBI Governor Shaktikanta Das addresses the media during a press conference (ANI) The list of authorized payment
(RBI) has come across instances of system providers / authorized pay-
unauthorised entities offering for- ment system operators is displayed
eign exchange (forex) trading facil- person not being an ‘Authorised “said RBIs notification. on the RBI website.
The RBI has also stated that no
Person’, unless under general or spe-
ities to Indian residents with prom- cial permission of the Reserve Bank entity should operate an Electronic This latest advisory to the pub-
ises of disproportionate/exorbitant lic comes after the RBI noticed that
returns” RBI notification said TalkCharge Technologies Pvt. Ltd.
The notification further adds Kotak share tanks 10% after RBI bars The entity was issued directions on
“On investigation, it has been ob- April 02, 2024, to stop the issuance
served that to facilitate unauthorised on boarding customers digitally and operation of its Prepaid Payment
forex trading, these entities have tak- Instruments or Wallets and refund
en recourse to engaging local agents he shares of Kotak Mahindra even a year. PayTM is a good ex- the balances held in the wallets with-
who open accounts at different bank Bank fell around 10 percent ample” said Vivek Karwa, VRIDHI in 15 days (which was later extended
branches for collecting money to- on the entity’s request to 45 days, by
wards margin, investment, charges”. Tafter RBI barred the bank for Investment May 17, 2024).
on boarding new online customers,
He further added “the capacity
Furthermore, these entities are “It has come to the notice of the
facilitating unauthorized forex trans- and issuing new credit cards. The in- of the bank in adding new clients Reserve Bank that the entity has is-
and business will slow down and
vestors reacted negatively since the
actions by allowing residents to remit opening of the market on the Thurs- also the cross-selling business will sued a legal notice to its customers
or deposit funds in rupees using do- day session, selling pressure is high slow down”. demanding the return of Cashback,
mestic payment systems like online on the Kotak shares. Earlier also in October 2023, failing which the matter will be re-
transfers and payment gateways. “The Kotak Bank stock has RBI had imposed a monetary penal- ported to the RBI. Thus, the entity
To curb such activities, the RBI has created an impression in the
has emphasized that no person been underperforming for many ty on the bank to the tune of Rs 3.95 minds of its customers that demand
years now. After this news the stock
crore for various non-compliance
should deal in or transfer any for- for repayment of cashback amount is
eign exchange or foreign security to may continue to be a laggard for issues, including in managing risks being made as per the directions of
and code of conduct in outsourcing
more time. The image of the bank
any entity not authorized by the RBI, has been temporarily dented. When of financial services, recovery agents the RBI,” the RBI said.
except under general or special per- RBI brings in restrictions, getting engaged by banks, customer service In the release, RBI today clari-
mission. “RBI directs that no person back to normalcy after correcting in banks, and loans and advances - fied that it has only directed the en-
shall deal in or transfer any foreign tity to refund the prepaid amount
exchange or foreign security to any all flaws can take few months to statutory and other restrictions. lying in the wallets, to the customers.

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