If you are a holder of either a credit card or a debit card in India, it is essential for you to be aware that the laws of India prevent you from engaging in particular kinds of overseas transactions or payments using your credit or debit card that has the ability to be used worldwide. An individual who possesses a credit card or debit card that can be used internationally is not permitted, in accordance with the Foreign Exchange Management Act of 1999 (FEMA) and the Foreign Exchange Management (Current Account Transaction) Rules of 2000, to use the card to make certain payments. This is according to the Reserve Bank of India (RBI), which is India’s central bank (FEMA Current Account Rules)
What kind of business dealings are not allowed?
Avinash Kumar Khard, Partner at DSK Legal, says, “The FEMA Current Account Rules provide a list of transactions that are not permitted in the first schedule of the rules. In addition, the use of credit cards or debit cards is not permitted for the completion of these transactions.”
According to Khard, “International credit cards and debit cards cannot be used for the online or other purchase of prohibited items like lottery tickets, banned or proscribed magazines, participation in sweepstakes, payment for call-back services, and so on, since no drawal of foreign exchange is permitted for such items/activities.” This is because international credit cards and debit cards are issued by international financial institutions.
In addition to the transactions listed above, using your credit card for FX trading, betting, or gambling is also forbidden, as stated in a recent email that SBI Credit Card sent to its consumers.
What does the punishment entail?
In most cases, consumers of banks and other financial institutions that provide credit or debit cards are informed by the institution that such transactions using the cards are forbidden. According to what was written in an email sent out by SBI Card, if a customer uses his or her credit card for such banned transactions, then in accordance with the regulations of the RBI, the cardholder would be held accountable and will be disqualified from holding the card.
Khard states, “If a person is found to be in violation of the FEMA Current Account Rules, then that person will be subject to a penalty that is imposed by the FEMA. This penalty amount could be as high as three times the amount involved in the violation in question.”
Advertisements for the aforementioned goods and services can be seen in prominent places across the internet in a variety of international locations, including casinos, hotels, and hotel websites. In order to make use of these, the individual is frequently required to pay with their card, whether it be a debit or credit card. If you are travelling outside of the country and come across one of these advertising and find that it intrigues you, then you should reconsider using your credit or debit card in that location.
Khard argues, “The FEMA Current Account Rules only apply to dealings with foreign countries and their currencies. Therefore, people who are travelling internationally should refrain from using their foreign credit cards and debit cards in order to avoid engaging in any transactions that are forbidden.”
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