Saturday, December 8, 2007

RBI cautions Public of remitting to cheap funds

The Reserve Bank of India (RBI) advised members of public not to fall prey to fictitious offers for release of cheap funds claimed to have been remitted by overseas entities to banks in India / Reserve Bank of India.

RBI recommends members of public that it should not make any remittance towards participation in such schemes/offers from unknown entities.

The typical modality of such offers, is that certain foreign entities/individuals including Indian residents acting as representatives of such entities / individuals, make offers through letters / emails, etc., of huge money in foreign currency to resident individuals / entities (including schools / hospitals), on the pretext of helping them in their business / ventures in India.

The offer is followed by a request, once the contact is established by a request seeking details of bank account of the Individuals / Indian entity and asking some amount to be remitted to them as initial deposit / commission so that the offer money could be transferred.

Further, reference are also received in the RBI in the recent past from individuals/
authorized dealers seeking approvals / clarifications for effecting remittances in foreign currency towards commission / fees for receiving prizes won in overseas lottery schemes etc.

RBI have taken into note that certain overseas organizations have been advising individuals / companies / trusts in India that huge sums of money for disbursal of loans in India at cheap rates has been kept in an account with the Reserve Bank and the funds would be released after approval from the Reserve Bank.In order to substantiate their claims, even copies of certificate / deposit receipts purported to have been issued by the Reserve Bank are produced by such operators.

RBI made a clarification that remittance in any form towards participation in lottery schemes is prohibited under Foreign Exchange Management Act, 1999.

Further, these restrictions are also applicable to remittances for participation in lottery-like schemes functioning under different names, such as, money circulation scheme or remittances for the purpose of securing prize money / awards, etc.

The apex bank also further clarifies that it does not maintain any account in the name of individuals / companies / trusts in India to hold funds for disbursal.

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