Illegal forex traders minting money

Hyderabad: The surrounding areas of Shehraan Market in the old city are still a hot spot for illegal foreign currency exchange, which has been causing losses to the government over the years.

Forex traders call out to people, and the area has the feel of a vegetable market. Potential customers are even physically pulled by the traders and forced to exchange their currency with them. Sources say that only five out 20 traders here are legal.

Usually at a foreign exchange office, the cash limit is $800, above which, the customer will have to accept a cheque from the trader. Those who want instant cash usually approach black markets like the Shehraan Market.

Sixty per cent of forex traders in Hyderabad do not have licences, say sources. A small-time licensed trader pays around Rs 50,000 per month as service tax. Meanwhile, illegal operators near Shehraan Market and other areas do business in crores everyday, none of which is shown in the accounts.

The city police has several times nabbed persons dealing with large amounts of foreign currency, which may also be connected to “Hawala” transactions.

As per the RBI guidelines and the Foreign Exchange Regulation Act, every foreign exchange transactions should be monitored. Violations are treated as criminal offences.

“We usually focus on foreign exchange if the matter is connected with Hawala transactions. If a person is holding unaccounted, huge foreign currency we may arrest him and hand him over either to the income-tax department or enforcement directorate,” said Koti Reddy, additional DCP task force.