The Reserve Bank of India (RBI) has notified the Foreign Exchange Management (Authorised Persons) Regulations, 2026, introducing a comprehensive regulatory framework governing Authorised Dealers (ADs), Full Fledged Money Changers (FFMCs), Forex Correspondents (FxCs), and related foreign exchange activities under the Foreign Exchange Management Act, 1999 (FEMA). 

The regulations were notified on April 30, 2026 and came into force from the date of publication in the Official Gazette. 

One of the most significant changes introduced by the RBI is the discontinuation of fresh authorisations for Full Fledged Money Changers (FFMCs). The RBI has clarified that no fresh applications for FFMC licences will be considered, except applications that were already under process on the date the regulations came into force. Applicants with pending applications have been directed to furnish additional information or documents within 30 days, failing which their applications would be deemed rejected. 

The regulations introduce a new three-category structure for Authorised Dealers — AD Category-I, AD Category-II, and AD Category-III. Applications for fresh authorisation under these categories are required to be submitted through the RBI’s PRAVAAH portal to the concerned regional office. 

Under the eligibility criteria, AD Category-I authorisation is restricted to banks licensed by the RBI. AD Category-II authorisation may be granted to RBI-licensed banks, NBFCs registered with the RBI, or existing FFMCs and Forex Correspondents functioning for at least two years with an average annual forex turnover of ₹50 crore during the preceding two financial years. AD Category-III authorisation is intended for entities dealing in foreign exchange incidental to their business activities or intending to provide innovative forex-related products and services. 

The RBI has also prescribed minimum net worth requirements. AD Category-II entities are required to maintain a minimum net worth of ₹10 crore, while AD Category-III entities must maintain at least ₹2 crore. Existing authorised persons seeking renewal must also comply with prescribed net worth conditions, including ₹25 lakh for single-branch FFMCs and ₹50 lakh for multi-branch FFMCs. 

The regulations place substantial emphasis on “fit and proper” criteria for applicants, promoters, directors, and Key Managerial Personnel (KMPs). RBI has mandated that entities and their key persons must possess integrity, reputation, financial services experience, and should not be disqualified under company law or subject to regulatory sanctions. At least 50% of directors and KMPs must possess qualifications and experience in the financial services industry. 

Additionally, where an applicant or its promoters, directors, KMPs, or parent entity are under investigation by the Directorate of Enforcement (DoE), the applicant must obtain a No Objection Certificate (NOC) from the DoE before applying, subject to certain timelines and deemed processing provisions. 

The RBI has further laid down circumstances under which applications may be rejected, including where the application is false or misleading, where eligibility conditions are not fulfilled, where the applicant is not considered “fit and proper,” or where approval is not considered to be in public interest. 

In relation to permitted activities, the regulations allow AD Category-I entities to undertake any current account or capital account transaction permissible under FEMA. AD Category-II entities can facilitate non-trade current account transactions, excluding gifts and donations, and foreign trade transactions up to ₹25 lakh per transaction. FFMCs are authorised to purchase and sell foreign currency notes and traveller’s cheques for foreign travel purposes and may function as agents under the Money Transfer Service Scheme (MTSS). 

The RBI has also prescribed ongoing operational conditions. Non-bank authorised persons are required to achieve and maintain minimum annual forex turnover thresholds — ₹50 crore for AD Category-II entities and ₹10 crore for FFMCs — within two years from commencement of operations or from the date of implementation of the regulations, whichever is later. 

A major structural reform introduced through the regulations is the establishment of the Forex Correspondent Scheme (FCS). Under this framework, AD Category-I and AD Category-II entities may appoint Forex Correspondents (FxCs) under a principal-agent model for conducting money-changing business. FxCs are permitted to purchase and sell foreign currency notes and traveller’s cheques and function as MTSS sub-agents. 

The regulations mandate principals to frame internal board-approved policies governing engagement of Forex Correspondents, including due diligence, systems and controls, customer grievance redressal, reporting requirements, and fit-and-proper criteria. 

Importantly, RBI has prohibited authorised persons from entering into any fresh franchisee arrangements under the existing “Master Direction – Money Changing Activities.” Existing franchisee arrangements must be discontinued within two years from commencement of the regulations. Thereafter, such entities may only function as Forex Correspondents under the newly introduced scheme. 

The regulations also provide an appeal mechanism. Applicants whose authorisation requests are rejected, or authorised persons whose licences are revoked, may file an appeal before the Executive Director in charge of the Foreign Exchange Department, RBI Central Office, Mumbai, within 45 calendar days from receipt of the rejection or revocation communication. 

The notification is expected to significantly reshape the foreign exchange and money-changing ecosystem in India by tightening eligibility norms, formalising the Forex Correspondent model, and phasing out the traditional franchisee structure in favour of a more regulated principal-agent framework.

Notification Details

Notification No. FEMA 401/2026-RB

Date: 30/04/2026

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