The Reserve Bank of India (RBI) has overhauled the authorisation and renewal framework for entities authorised to deal in foreign exchange (fx), whereby Authorised Dealers (AD-I and II category) can appoint a Forex Correspondent (FxC) for conducting money changing business under a ‘principal-agent’ model.
A FxC can purchase foreign currency notes/coins and travellers’ cheques; sell foreign currency notes/coins and travellers’ cheques for foreign travel purposes; and function as Money Transfer Service Scheme sub-agent in accordance with the guidelines on Money Transfer Service Scheme (MTSS).
Category-II players such as certain banks, NBFCs and established money changers, however, face a ₹25 lakh cap per foreign trade transaction, per Foreign Exchange Management (Authorised Persons) Regulations, 2026.
AD functions
AD (Authorised Dealer) Category-I entities, primarily banks, retain full access to current and capital account transactions.
AD Category-III can offer offer innovative products and services that may involve dealing in foreign exchange.
The Central bank has also tightened entry norms. Entities applying for AD license must be companies incorporated under the Companies Act, 2013, with clearly defined forex-related objectives in their memorandum of association.
Minimum net worth requirements have been set at ₹10 crore for AD Category-II and ₹2 crore for Category-III entities. Additionally, promoters, directors and key managerial personnel must meet stringent “fit and proper” criteria covering integrity, experience and regulatory track record.
Published on May 6, 2026