Are prop firms legal in India? RBI, FEMA and the Alert List
There is no law that names prop firms, but the RBI's position on overseas forex trading makes this a grey area. Here is what is clear and what isn't.
What the RBI says
Under FEMA, Indian residents may only trade forex with authorised dealers and on recognised exchanges, and only in permitted currency pairs. The RBI keeps an Alert List of platforms that are not authorised to deal in forex, and it is updated regularly.
Where prop firms fit
A prop firm sells an evaluation on a demo account and pays you a share of simulated profits. That is different from depositing money with an overseas broker, but no Indian regulator has ruled on it, so treat it as a grey area.
How we handle it
We leave out firms that appear on the RBI Alert List when we check, which currently includes FTMO and FundedNext. The list is not complete, so a firm being absent from it does not mean it is authorised.
Before you pay
Search the firm's name on the RBI Alert List, read recent Trustpilot reviews and check how long the firm has been operating. Never pay through a link sent to you on Telegram or WhatsApp.
Frequently asked questions
Is a prop firm the same as a forex broker?
No. A prop firm sells a challenge on a demo account; a broker holds your deposit and executes real trades.
Can the RBI block a firm?
The RBI can add a firm to its Alert List and banks may then block payments to it.