RBI Notifies Foreign Exchange Management (Authorized Persons) Regulations, 2026.

Reserve Bank of India (“RBI”) by Notification dated 30.04.2026, published on 06.05.2026, notified the Foreign Exchange Management (Authorised Persons) Regulations, 2026 (“AP Regulations”).¹

The salient features of the AP Regulations are as follows:

(i) Scope and coverage of authorised persons: No person is permitted to act as an authorised person (“AP”) in foreign exchange without obtaining authorisation from RBI under the AP Regulations. Existing APs may continue to operate until expiry of their current authorisation, subject to compliance with the AP Regulations and applicable directions. Applications for fresh authorisation are required to be submitted online through the PRAVAAH portal to the RBI regional office under whose jurisdiction the applicant’s registered office is situated.

(ii) Categorisation under authorised dealer framework: RBI will grant fresh authorisations under three categories: AD Category-I, AD Category-II and AD Category-III.

(a) AD Category-I only covers banks licensed by RBI and is permitted to undertake any current and capital account transaction permissible under FEMA.

(b) AD Category-II covers banks licensed by RBI, NBFCs registered with RBI, and eligible Full-Fledged Money Changers (“FFMCs”)/ Forex Correspondents that have been functioning for at least two years and have an average annual forex turnover of INR 50 crores during the previous two financial years. AD Category-II entities may undertake any non-trade current account transaction permissible under FEMA (other than gifts and donations) and foreign trade transactions up to INR 25 lakhs per transaction.

(c) AD Category-III is a newly introduced category for entities either required to deal in foreign exchange incidental to their principal activities or intending to offer innovative products and services involving foreign exchange transactions. The activities permitted to an AD Category-III entity shall be specifically set out in the authorisation issued by RBI.

(iii) Treatment of FFMCs and legacy applications: RBI shall not consider any fresh applications for authorisation as an FFMC, except applications already under process as on the date of commencement of the AP Regulations. Such pending applications are required to comply with the eligibility conditions, documentation requirements and procedures prescribed under the AP Regulations. Existing FFMCs may continue operations and apply for renewal as APs, subject to prescribed minimum net worth requirements of INR 25 lakhs for single-branch FFMCs and INR 50 lakhs for multiple-branch FFMCs, along with compliance with the prescribed fit and proper criteria.

(iv) Eligibility, fit-and-proper and enforcement clearance: Every applicant must be a company incorporated under the Companies Act, 2013 (“CA 2013”), and its memorandum of association must specifically authorise the foreign exchange activity for which approval is sought. Promoters, directors and key managerial personnel (“KMPs”) are required to satisfy prescribed fit and proper criteria relating to qualifications and experience in the financial services industry, integrity, reputation, and absence of criminal convictions, regulatory sanctions or disqualifications under corporate laws. Further, at least 50% of the directors and KMPs must possess qualifications and experience in the financial services industry. Where the applicant, its promoters, directors, KMPs or parent entity is under investigation by the Directorate of Enforcement (“DoE”), the applicant is required to furnish a no-objection certificate (“NOC”) from the DoE dated not earlier than 30 days from the application date. However, where no response is received from the DoE within 60 days of the request, the application may be processed on the basis of a declaration by the applicant, provided the request to the DoE was made not earlier than 90 days prior to the RBI application.

(v) Net-worth and minimum turnover thresholds: At commencement of business, APs must have minimum positive net worth as per their latest audited balance sheet, certified by statutory auditors, with specific minimum net worth of INR 10 crores for AD Category-II, INR 2 crores for AD Category-III and the same to be maintained for renewal of authorisation. Authorised persons other than banks/NBFCs must also achieve a minimum annual forex turnover within two years from (a) commencement of forex business, or (ii) coming into force of the Regulations, and maintain it on an ongoing basis (market reports indicate INR 50 crores for AD Category-II and INR 10 crores for FFMCs).

(vi) Validity of authorisation: Authorisation granted under the AP Regulations shall remain valid until revoked or surrendered. In the case of banks and NBFCs, such authorisation shall be co-terminus with the banking licence or certificate of registration, as applicable. APs are required to commence operations within six months from the date of authorisation and intimate RBI accordingly. Prior approval of RBI is also required before any change in management or any change in control or ownership exceeding 50%.

(vii) Forex Correspondent Scheme: AD Category-I and AD Category-II entities are permitted to appoint Forex Correspondents (“FxCs”) as agents for money-changing business under a principal-agent model. FxCs may purchase/sell foreign currency notes/coins and travellers’ cheques, and act as Money Transfer Service Scheme sub-agents, with all transactions being recorded in the books of the principal AD. Non-bank authorised dealers acting as principals (including NBFCs) must comply with the RBI (NBFC – Managing Risks on Outsourcing) Directions, 2025 in relation to their FxC arrangements.

(viii) Discontinuation of franchisee model and transition to FxCs: Authorised persons are barred from entering into any fresh franchisee arrangements under the earlier “Guidelines for Appointment of Agents/Franchisees by AD Category-I, AD Category-II and FFMC”. Existing franchisee arrangements must be discontinued within two years from commencement of the AP Regulations, and such franchisees may, thereafter, be onboarded as FxCs subject to FCS conditions.

The AP Regulations have come into effect from the date of its publication in the official gazette i.e., 06.05.2026.

Footnotes

^{1 Foreign Exchange Management (Authorized Persons) Regulations, 2026.}

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