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Regulations for Authorised Persons

Reserve Bank of India (RBI) has issued a revised framework for authorisation of any person as an Authorised Person under the Foreign Exchange Management Act (FEMA), 1999.

Who can act as an Authorised Person?

  • No person shall act as an authorised person without obtaining an authorisation from the RBI.
  • A person seeking authorisation as an authorised person may apply to the RBI through the PRAVAAH portal (https://pravaah.rbi.org.in) to the regional office concerned of the RBI under whose jurisdiction the registered office of the applicant is established.
  • RBI shall consider applications for fresh authorisation under 3 categories, namely, Authorised Dealer (AD) Category-I, AD Category-II and AD Category-III.

Which entities are eligible to act as an Authorised Person?

Category Eligible entities
AD Category-I A bank licensed by the RBI.
AD Category-II
  • A bank licensed by the RBI or a Non-Banking Financial Company (NBFC) registered with the RBI.
  • A Full-Fledged Money Changer (FFMC) or a Forex Correspondent (FxC) functioning for at least 2 years with an average annual forex turnover of ₹50 crore during the previous 2 financial years.
AD Category-III An entity –
  • required to deal in foreign exchange incidental to the activities undertaken by it.
  • that intends to offer innovative products and services that may involve dealing in foreign exchange.

How much shall be the net worth of an Authorised Person?

An applicant, at the time of commencement of business as an authorised person, shall have a minimum net worth (based on its latest audited balance sheet) as below –

Category Minimum Net Worth
AD Category-II ₹10 crore
AD Category-III ₹2 crore

What are the guidelines for renewal of authorisation of existing Authorised Persons?

  • An entity conducting activities as an authorised person may apply for renewal of its existing authorisation, if its net worth is a minimum of –

Category Minimum Net Worth
Single branch FFMC ₹25 lakh
Multiple branch FFMC ₹50 lakh
AD Category-II ₹10 crore
AD Category-III ₹2 crore

  • An application for renewal of existing authorisation shall be made at least 2 months before expiry of the existing authorisation. The existing authorisation shall continue till renewal is granted or the application is rejected, as the case may be.

Which activities can be undertaken by an Authorised Person?

Category Permitted Activities
AD Category-I Current account and capital account transactions.
AD Category-II Non-trade current account transactions, other than gift and donation.
Foreign trade transactions up to ₹25 lakh per transaction.
AD Category-III As mentioned in the authorisation issued by the RBI.
FFMC Purchase of foreign currency notes and travellers’ cheques.
Sale of foreign currency notes and travellers’ cheques for foreign travel purposes.
Functioning as an agent under the Money Transfer Service Scheme (MTSS).

What shall be the minimum forex turnover of an Authorised Person?

  • Annual Forex Turnover means the aggregate of foreign exchange purchased and sold by an authorised person or a FxC from / to the public directly, and through its agents / franchisees / FxC, during a financial year, excluding the value of inward remittances processed.
  • An authorised person, other than a bank or an NBFC, shall achieve minimum annual forex turnover as given below, within 2 years from May 6, 2026 or from the commencement of forex business, whichever is later, and shall maintain the minimum annual forex turnover thereafter on an ongoing basis –

Category Minimum annual forex turnover
AD Category-II ₹50 crore
FFMC ₹10 crore

What is Forex Correspondent Scheme (FCS)?

  • AD Category-I or AD Category-II may appoint entities as agents, known as Forex Correspondent (FxC), for conducting money changing business under a ‘principal-agent’ model.
  • FxC is permitted to undertake the following activities –
    • Purchase of foreign currency notes / coins and travellers’ cheques.
    • Sale of foreign currency notes / coins and travellers’ cheques for foreign travel purposes.
    • Functioning as MTSS sub-agent.
  • All transactions by an FxC under this scheme shall be reflected in the books of account of the principal concerned.
  • FxC may act as an agent to more than one authorised dealer.
  • FxC, with the approval of its principal, may deal in foreign exchange with any other FxC or an authorised person, which is not its principal.
What are other regulations?
  • If the net worth of the authorised person falls below the minimum requirement, the same shall be restored within 6 months. 
  • An authorised person, other than a bank, shall commence its operations within 6 months from the date of issuance of authorisation.
  • An applicant whose application for authorisation has been rejected by the RBI or an authorised person whose authorisation has been revoked, may appeal against the rejection of the application or the revocation to the Appellate Authority, namely, the Executive Director in charge of the Foreign Exchange Department within 45 calendar days from the date of receipt of the letter intimating rejection of application or revocation of authorisation. The Appellate Authority may pass a reasoned order within 60 calendar days from the date of receipt of appeal.
  • Application for fresh authorisation as an FFMC shall not be considered by the RBI, except those already under process. In case of such applications, the minimum Net Owned Funds (NOF) required for consideration as FFMC shall be as below –
Category Minimum NOF
Single branch FFMC ₹25 lakh
Multiple branch FFMC ₹50 lakh
  • An authorised person shall not enter into any fresh franchisee arrangements. The existing franchisee arrangements shall be discontinued within 2 years from May 6, 2026. Thereafter, the franchisees can be appointed as an FxC, subject to conditions laid down under the FCS.


References

Reserve Bank of India. (2026, April 30). 'Foreign Exchange Management (Authorised Persons) Regulations, 2026'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13444&Mode=0

Reserve Bank of India. (2026, May 06). 'Issuance of Foreign Exchange Management (Authorised Persons) Regulations, 2026'. Retrieved from https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13445&Mode=0

Reserve Bank of India. (2026, May 06). 'Issuance of Foreign Exchange Management (Authorised Persons) Regulations, 2026'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=62691


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