Summary of this article
RBI stops issuing fresh licences to full-fledged money changers.
New forex framework creates three authorised dealer licence categories.
Existing FFMCs can continue operations under revised compliance rules.
The Reserve Bank of India (RBI) has introduced revised rules for entities dealing in foreign exchange transactions, under which fresh licences for full-fledged money changers (FFMCs) will no longer be issued.
The new framework has been introduced through the Foreign Exchange Management (Authorised Persons) Regulations, 2026. According to RBI, the changes are aimed at simplifying the authorisation process for entities dealing in foreign exchange while improving the delivery of forex-related services.
The central bank said it reviewed the existing framework under the Foreign Exchange Management Act (FEMA), 1999, to rationalise rules and ease compliance requirements for authorised entities.
The regulations were notified on April 30, 2026.
What The Revised Rules Say
Under the revised norms, all entities that want to undertake foreign exchange transactions must obtain authorisation from the RBI. The regulations also revise the structure for different categories of authorised dealers.
RBI has introduced three categories for fresh authorisation applications.
Banks can apply under the Authorised Dealer (AD) Category I licence. These entities are permitted to carry out a wide range of foreign exchange transactions, including those related to trade, remittances and other permitted capital account transactions.
Non-banking financial companies (NBFCs), existing FFMCs and forex correspondents can apply under AD Category II, subject to certain conditions. To qualify, these entities must have operated for at least two years and recorded an average annual forex turnover of at least Rs 50 crore during the previous two financial years.
RBI has also created a new AD Category III for specific entities planning to offer innovative forex-related products and services. The central bank said this category would include entities whose business models involve dealing in foreign exchange in new or emerging formats.
A major change under the revised rules is the discontinuation of fresh authorisations for FFMCs. These entities are typically involved in money-changing activities such as the purchase and sale of foreign currency for travel and related purposes.
RBI said applications for fresh FFMC licences will not be considered after the regulations come into force. However, applications that were already under process before the notification date will continue to be examined.
Existing FFMCs Can Continue Operations
While new licences have been stopped, existing FFMCs can continue their operations subject to regulatory compliance and renewal requirements.
RBI has also expanded the principal-agent model under the revised framework. This model allows authorised entities to appoint agents for providing forex-related services. The move is expected to widen the reach of foreign exchange services while maintaining regulatory oversight.
The central bank said the revised framework seeks to balance operational flexibility with checks and controls.
Net Worth And Company Structure Conditions
The regulations specify that entities seeking authorisation must be incorporated under the Companies Act, 2013. Applicants must also meet minimum net worth requirements prescribed by the RBI.
The central bank has not changed the requirement that entities dealing in foreign exchange must follow FEMA rules and other reporting standards applicable to authorised persons.
The revised regulations come at a time when digital payment systems and cross-border financial services are expanding. The creation of AD Category III also signals RBI’s attempt to accommodate newer business models linked to forex services within a regulated framework.
The updated rules replace the earlier authorisation structure and will govern future applications and renewals for entities involved in foreign exchange transactions.
