Regulatory Alert

With the objective to rationalise and simplify the framework for Authorised Persons and to improve delivery of foreign exchange services and ease compliance requirements, the Foreign Exchange Management (Authorised Persons) Regulations, 2026 (“Authorised Persons Regulations”) have been notified by RBI vide notification dated 30 April 2026, which shall come into effect from the date of publication in the official gazette¹.

Summary of the key amendments is as follows:

I. Guidelines for the grant of authorisation

• Prior approval from the RBI is necessary to act as an authorised person.

• Existing authorised person may continue to act as such until the expiry of its existing authorisation in accordance with the conditions of the authorisation issued as well as these regulations.

• A person seeking authorisation as an authorised person may apply to the RBI through the PRAVAAH portal to the concerned regional office under whose jurisdiction the registered office of the applicant is established.

• RBI shall consider the application for fresh authorisation under 3 categories, viz. AD Category-I, AD Category-II and AD Category-III.

• No application for fresh authorisation as Full-Fledged Money Changer (“FFMC”) to be considered by RBI except for applications pending as on the date of coming into force of these regulations.

  • Additional information/documents as may be sought by RBI for processing such application shall be provided within 30 days from the date of coming into force of these regulations, else the application shall be deemed to have been rejected².

B. Eligibility conditions for acting as an authorised person

• Applicant shall be a company incorporated under the Companies Act, 2013.
• Memorandum of Association of the applicant should include foreign exchange-related activity.
• Applicant shall fulfil the following criteria at the time of application:

Category	Eligible entities
AD Category-I	Bank licensed by the RBI
AD Category-II	i) Bank licensed by the RBI or an NBFC registered with the RBI
	ii) FFMC or a Forex Correspondent (“FxC”)3 functioning for at least 2 years with an average annual forex turnover4 of INR 50 cr. during the previous 2 financial years (FYs).
AD Category-III	i) Entity required to deal in forex incidental to the activities undertaken by it.
	ii) Entity required to offer innovative products & services that may involve dealing in forex.

 

• Applicant (at the time of commencement of business as an authorised person) should have a minimum positive net worth (based upon its latest audited balance sheet) as mentioned below and should submit a certificate to this effect from its statutory auditors:

Category	Min. Net Worth (in INR)
AD Category-II	10 cr.
AD Category-III	2 cr.

• Applicant, its promoters, directors and KMPs shall be ‘fit and proper' inter alia, including qualification & experience in the financial services industry (to be satisfied by at least 50% of directors and KMPs); integrity, reputation & character, etc.
• In case the applicant or any of its promoters, directors, KMPs or its parent entity is under investigation by the Directorate of Enforcement (“DoE”), the applicant shall furnish, along with the application, a No Objection Certificate (“NOC”) obtained from DoE which is dated not earlier than 30 days from the date of such application.
  • In case of no reply from the DoE within 60 days of receipt of the request, the application will be processed without a NoC from the DoE based on a declaration to this effect from the applicant.
• Certain requirements, such as fit & proper, minimum networth and entity legal status, shall not be applicable to entities regulated by RBI under the provisions of other Acts.  

C. Renewal of authorisation of existing authorised persons

• Existing authorised persons may apply for renewal of their existing authorisation under these regulations (subject to compliance with ‘fit & proper’ criteria and NOC from DoE, if applicable), if their net worth is a minimum of –

Category	Net worth (in INR)
Single-branch FFMC	25 lakhs
Multiple branch FFMC	50 lakhs
AD category-II	10 cr.
AD category-III	2 cr.

• Renewal application shall be made at least 2 months before the expiry of the existing authorisation.
  • Existing authorisation shall continue till renewal is granted under these regulations or the application is rejected (as the case may be).

D. Consideration of application

• RBI shall examine all the relevant matters (including eligibility conditions) while considering an application.
• Application, which is incorrect, false, misleading or not in public interest or where the application is not compliant with eligibility requirements (including inability of promoter/director/KMPs to satisfy fit & proper criteria) may be rejected by RBI.
• Any application for a grant or renewal of authorisation from an entity:
  • Whose authorisation has been revoked or voluntarily surrendered; or
  • Whose application has been rejected by RBI (other than inability to meet net-worth); or
  • Where promoter/s or director/s or KMP/s have significant influence over such entities shall not be considered by the RBI for a period of 1 year from the date of revocation/ voluntary surrender/ application rejection (as the case may be).

II. Permitted Activities

• An authorised person shall be permitted to facilitate the following activities (unless otherwise specifically permitted or restricted by RBI):

Category	Permitted Activities
AD Category-I	Current & capital account transactions are permissible under FEMA.
AD Category-II	Non-trade current account transaction permissible under FEMA (other than gift & donation); and   Foreign trade transactions up to INR 25 lakh/transaction.
AD Category-III	As mentioned in the authorisation issued by the RBI
FFMC	Purchase of foreign currency notes & travellers’ cheques;   Sale of foreign currency notes & travellers’ cheques for foreign travel purposes; and   Functioning as an agent under the Money Transfer Service Scheme (“MTSS”) in accordance with prescribed guidelines.

III. Conditions of authorisation

• Authorisation granted under these regulations shall be valid until revoked or surrendered (authorisation shall be co-terminus with the banking license or registration certificate in case of banks and NBFCs, respectively).
• Authorised person (other than banks or an NBFC) shall achieve min. annual forex turnover (i.e., INR 50 cr. in case of AD Category-II and INR 10 cr. in case of FFMC) within 2 years from the date of coming into force of these regulations or commencement of forex business, whichever is later and maintain the aforesaid minimum. turnover on an ongoing basis.
• Authorised person (other than bank) shall-

  • Commence its operations within 6 months from the date of issuance of authorisation, under intimation to the concerned regional office of RBI;

  • Seek prior approval from RBI before a change of more than 50% in management/control/ownership;

  • Report to the concerned regional office within a period of 30 days from the end of FY, any change in director/KMP, events/information affecting the ‘fit & proper’ status of existing promoter/director/KMP;

  • Report details of the investigation initiated against it by DoE within 30 days of becoming aware of such an investigation.

• Authorised person (other than bank) shall submit information regarding conduct of business from any new place; closure of place of business and shifting of registered office within 7 days of opening, beginning operations/closure/shifting (as the case may be) to RBI through APConnect application⁵.

IV. Appeal Mechanism

• An applicant whose application has been rejected or an authorised person whose authorisation has been revoked may make an appeal to the Appellate Authority⁶ within 45 calendar days from the date of receipt of the letter intimating such rejection or revocation.

• Appellate Authority shall pass a reasoned order within 60 calendar days from the date of receipt of the appeal.

V. Forex Correspondent Scheme (“FCS”)

• AD Category-I or Category-II may appoint entity/ies as agents known as Forex Correspondent for conducting money changing business under the ‘principal-agent model’.

• Forex Correspondent shall be permitted to deal in foreign exchange with any of its customers or with other entities.

• Forex Correspondent is permitted to undertake purchase & sale (for foreign travel purposes) of foreign currency notes/coins & travellers’ cheques; and functioning as MTSS sub-agent.

• Forex Correspondent may act as an agent to more than 1 authorised dealer and may deal (with its principal’s approval) in forex with other forex correspondents or an authorised person which is not its principal.

• Principal shall inter alia issue necessary permission to each outlet of the forex correspondent and ensure preservation, protection and confidentiality of customer information in the custody of its forex correspondents. Further, it shall submit details of appointed forex correspondents to the RBI within 15 days from the end of each calendar quarter.

• Non-bank authorised dealer, acting as a principal (irrespective of whether it is an NBFC or not), shall follow the prescribed guidelines⁷.

VI. Franchisees of Authorised Persons

• An authorised person shall not enter into any fresh franchisee arrangement in terms of the prescribed guidelines contained in Section III of the Master Directions⁸.

• Franchisee arrangements valid as on the date of coming into force of these regulations shall be discontinued within 2 years. Franchisees can be appointed as Forex Correspondents thereafter, subject to prescribed conditions.

VII. Remarks

These regulations reflect a move towards a more structured and compliance-driven foreign exchange intermediation ecosystem, emphasising governance and operational transparency.