In a move to streamline foreign exchange operations, the Reserve Bank of India (RBI) has updated the authorisation and renewal framework for entities dealing in foreign exchange (fx).
Under the revised norms, Authorised Dealers (AD Category-I and II) can now appoint a Forex Correspondent (FxC) to carry out money changing activities through a ‘principal-agent’ model.
A Forex Correspondent is permitted to purchase foreign currency notes and coins, as well as travellers’ cheques. It can also sell foreign currency notes, coins, and travellers’ cheques for foreign travel purposes. In addition, FxCs can function as sub-agents under the Money Transfer Service Scheme (MTSS), following the prescribed guidelines.
However, Category-II entities, including certain banks, NBFCs, and established money changers, are subject to a ₹25 lakh cap per foreign trade transaction, as per the Foreign Exchange Management (Authorised Persons) Regulations, 2026.
Authorised Dealer Category-I entities, mainly banks, will continue to have full access to both current and capital account transactions. Meanwhile, AD Category-III entities are allowed to introduce innovative products and services that may involve foreign exchange dealings.
RBI has also strengthened entry requirements. Entities applying for an AD licence must be companies registered under the Companies Act, 2013, with clearly defined forex-related objectives in their memorandum of association.
Minimum net worth criteria have been set at ₹10 crore for AD Category-II entities and ₹2 crore for Category-III entities. Promoters, directors, and key managerial personnel must also meet strict “fit and proper” standards, covering integrity, experience, and regulatory track record.
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