RBI Revamps Authorised Person Categories: New AD Category-II for Non-Banks

RBI/2005-06/314 A.P. (DIR Series) Circular No. 25 A.P. (FL Series) Circular No. 02 March 6, 2006 To, All banks Authorised to Deal in Foreign Exchange All Authorised Money Changers (AMCs) / Full-Fledged Money Changers (FFMCs) Dear Madam / Sir, Authorised Persons- Categorisation In terms of Section 10 (1) of the Foreign Exchange Management Act, 1999, the Reserve Bank, on an application, may authorise any person to be known as an authorised person, to deal in foreign exchange as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit. 2. Currently, Reserve Bank issues licences to authorised dealers (banks authorised to deal in foreign exchange) and Full Fledged Money Changers. Licences are also granted to financial and other institutions to carry out specific foreign exchange transactions related to their business / activities. 3. With the progressive liberalisation in foreign exchange related transactions, a large segment of the population can now undertake a variety of current account transactions on their individual accounts, without approaching the Reserve Bank. With a view to providing adequate foreign exchange facilities to common persons, to widen the scope of activities which the Authorised Persons are eligible to undertake, to increase the number of entities that are eligible to sell foreign exchange to the public for their day-to-day current account transactions and to ensure efficient customer service through competition, an internal group was constituted to study the related issues. The Group was required to make recommendations keeping in view the enhanced as well as wider access and accompanying safeguards, especially reporting requirements. The Report "Licensing Policy for Authorised Persons - Liberalisation" was placed on the Reserve Bank website on December 1, 2005, inviting feedback from the public. 4. Taking into account the feedback received on the Report, Reserve Bank has decided to issue authorisation to select entities as given below, for undertaking release / remittance of foreign exchange for various current account non-trade related transactions. Consequently, all entities issued authorisation under sub-section (i) of Section 10 of the Foreign Exchange Management Act, 1999 will be categorised / re-categorised as under: (a) Banks currently authorised to Authorised Dealers (ADs) deal in foreign exchange. Category I (b) (i) Upgraded FFMCs } Authorised Dealers (ADs) Category II (ii) Select RRBs } (iii) Select UCBs } (iv) Other entities } (c) Select Financial and other Institutions `Authorised Dealers (ADs) Category III (d) FFMCs No change 5. The details of the scheme for issue of authorisation as Authorised Dealers - Category II are given in Annex I to this circular. 6. The contents of this circular may be brought to the notice of all your constituents concerned. 7. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Vinay Baijal) Chief General Manager Annex I [Annexure to A. P. (DIR Series) Circular No. 25 dated March 6, 2006] Authorised Person- - Authorisation as Authorised Dealer (AD) - Category II Scheme With a view to providing adequate foreign exchange facilities to common persons for efficient customer service through competition there was a need to widen the scope of activities which the Authorised Persons are currently eligible to undertake and also to increase the number of entities that are eligible to sell foreign exchange to public for their day-to-day current account transactions . The Reserve Bank has, therefore, decided to grant licences to certain entities to undertake more transactions, in addition to what Full Fledged Money Changers (FFMCs) are currently permitted, by authorising them to undertake release / remittance of foreign exchange for certain non-trade related current account transactions. Such entities will be called Authorised Dealers – Category II (ADs - Category II). 2. Classification of Persons Authorised to deal in the foreign exchange Sr. No.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/314 · issued 06 Mar 2006. The plain-English explanation above is BankPulse’s own independent summary.

🖨 Print / Save as PDF 🔗 Copy link☆ Save for later