The Reserve Bank of India has issued the Foreign Exchange Management (Authorised Persons) Regulations, 2026, setting a new authorisation framework for entities dealing in foreign exchange under the Foreign Exchange Management Act, 1999. Fresh authorisations will be considered only under three Authorised Dealer categories through the PRAVAAH portal, while fresh applications for Full Fledged Money Changer authorisation will not be considered except for applications already under process. Authorisations will remain valid until revoked or surrendered, and authorisations for banks and non-banking financial companies will be co-terminus with their banking licence or certificate of registration. The regulations set category-specific eligibility, permitted activities and prudential conditions. AD Category-I is limited to banks licensed by the Reserve Bank and may undertake any current account and capital account transaction permissible under the Act. AD Category-II may include Reserve Bank-licensed banks, registered non-banking financial companies, and FFMCs or Forex Correspondents that have operated for at least two years with average annual forex turnover of INR 50 crore over the previous two financial years. It requires minimum net worth of INR 10 crore and permits non-trade current account transactions other than gifts and donations, plus foreign trade transactions up to INR 25 lakh per transaction. AD Category-III is for entities that need to deal in foreign exchange incidental to their activities or that intend to offer innovative products and services involving foreign exchange, with minimum net worth of INR 2 crore and activities defined in the authorisation. Applicants, promoters, directors and key managerial personnel must meet fit and proper standards, at least 50% of directors and key managerial personnel must have financial services qualifications and experience, and non-bank authorised persons must meet ongoing turnover, reporting and change-of-control requirements. The rules also introduce a Forex Correspondent Scheme under which AD Category-I and AD Category-II firms may appoint agents on a principal-agent model for money changing and Money Transfer Service Scheme sub-agent activities, subject to board-approved policies, quarterly reporting and outsourcing risk controls for non-bank principals. No fresh franchisee arrangements may be entered into, and existing franchisee arrangements must be discontinued within two years, after which franchisees may be appointed as Forex Correspondents if they meet the scheme conditions. The regulations take effect from publication in the Official Gazette. Existing authorised persons may continue until their current authorisation expires and may apply for renewal at least two months before expiry, subject to net worth thresholds including INR 25 lakh for a single-branch FFMC, INR 50 lakh for a multi-branch FFMC, INR 10 crore for AD Category-II and INR 2 crore for AD Category-III. Pending FFMC applications must provide any additional information sought within thirty days of the regulations coming into force or they will be deemed rejected.
Reserve Bank of India 2026-04-30
Reserve Bank of India issues new foreign exchange authorisation rules with three AD categories and no fresh FFMC licensing
The Reserve Bank of India has issued the Foreign Exchange Management (Authorised Persons) Regulations, 2026, creating a three-category authorisation framework for entities dealing in foreign exchange under FEMA, 1999, with new authorisations processed via the PRAVAAH portal and no new Full Fledged Money Changer licences beyond those already in process. The regulations prescribe category-specific eligibility, net worth, activity and prudential conditions, introduce a Forex Correspondent Scheme for AD Category-I and II entities on a principal-agent model, and require existing franchisee arrangements to end within two years. Existing authorised persons may continue until their current authorisations expire and may seek renewal subject to revised net worth thresholds.