The Reserve Bank of India (RBI) has proposed a revamped licensing system for “Authorised Persons (APs)” under the Foreign Exchange Management Act (FEMA) to boost efficiency and access to foreign exchange services for individuals and businesses. This draft framework, released on December 26, seeks to:
- Simplify money changer licensing: Recognizing the widespread availability of banking services, the RBI plans to streamline authorization for money changers. A new category called “Forex Correspondents (FxCs)” is proposed, allowing money changers to operate under the umbrella of authorized dealers, simplifying their operations.
- Expand services of AD Category-II entities: These entities will gain the ability to handle trade-related transactions up to Rs. 15 lakh per transaction, broadening their scope and enhancing competition.
- Perpetual authorization for qualifying AD Category-II entities: Meeting specific criteria will grant long-term authorization to qualifying AD Category-II entities, easing administrative burdens.
- Review current regulatory framework: The RBI will further review the overall regulatory framework for APs to ensure its effectiveness and adaptability.
This revamped framework aims to improve the delivery of foreign exchange services to individuals, tourists, and businesses while maintaining necessary safeguards. The RBI welcomes feedback from all stakeholders until January 31, 2024.