The Reserve Bank of India (RBI) is India’s central banking institution and the country’s principal regulator for foreign exchange under the Foreign Exchange Management Act (FEMA), 1999. RBI controls capital flows, regulates forex transactions, and oversees the Authorized Dealer (AD) banks that facilitate foreign currency exchange in India.
The Reserve Bank of India (RBI) enforces a comprehensive foreign exchange control regime under FEMA. While margin forex trading is banned, individuals can legally participate in forex via authorized dealers, LRS, or exchange-traded derivatives. Always use RBI-compliant channels for safe and legal forex exposure.
- RBI does not permit retail forex trading on margin with leverage for individuals
- Leverage for currency derivatives is allowed only on SEBI-regulated exchanges (typically ~20:1)
- Regulates all foreign exchange transactions in India under FEMA
- Approves and supervises Authorized Dealers (AD Category I, II, III)
- Sets limits for Liberalised Remittance Scheme (LRS) for individuals
- Coordinates with SEBI for currency derivative markets on exchanges
- Enforces rules against unauthorized forex trading and offshore remittances
- Visit the RBI Authorized Dealers List
- Search by institution name or category
- Confirm forex authorization and remittance scope
- Must hold RBI authorization as an AD or Money Changer
- Must follow KYC, AML, and FEMA reporting guidelines
- Reporting of forex transactions via Form A2, Softex, or ECB portals
- Restrictions on remittance purpose, source of funds, and beneficiaries
Advantages
- Controls volatility and capital outflows
- Strong remittance monitoring via FEMA
- Prevents illegal or speculative forex activity
- Secure access through regulated banking channels
Limitations
- Retail margin forex trading is banned
- Individuals cannot trade cross-border forex pairs with leverage
- High paperwork and restrictions on remittance categories
Country
India
Established
1935
Contact
022 2260 1000
Complaint bodies
RBI Consumer Education and Protection Department (CEPD) Enforcement Directorate (ED) – for FEMA violation cases
Hotline
14440
Complaint email
Last updated on: March 27, 2025
High Risk Warning : Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.