The Reserve Bank of India (RBI) has introduced new rules for companies and institutions dealing in foreign exchange (forex) services.
One of the biggest changes is that the RBI will no longer issue licenses to new money changers.
The central bank says the updated rules are aimed at improving forex services while making compliance easier and more transparent.
Under the new framework, every entity will need RBI approval before offering any forex-related service.
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Focus on Better and Safer Forex Services
According to the RBI, the existing system for authorized forex dealers has been reviewed to improve customer services and ensure proper monitoring.
The central bank also plans to expand the principal-agent model.
This means approved institutions may be able to offer forex services through agents, helping customers access these services more easily.
At the same time, the RBI has stressed the importance of proper due diligence and tighter regulation in the sector.
RBI Creates Three New Categories
Under the revised rules, applications for forex authorization will now be considered under three different categories.
AD Category I
Banks can apply under this category to offer foreign exchange services.
AD Category II
NBFCs, existing full-fledged money changers (FFMCs), and forex agents can apply under this category.
However, these entities must:
Be operating for at least two years
Have an average annual forex turnover of ₹50 crore over the last two financial years
New Category for Innovative Forex Services
The RBI has also introduced AD Category III.
This category is meant for entities that want to launch new and innovative forex-related products or services.
The move is seen as an effort to encourage innovation while keeping the sector under proper regulatory supervision.
No New Licenses for Money Changers
The RBI made it clear in the notification issued on April 30 that applications for new FFMC licenses will no longer be accepted.
This means new money changer businesses will not receive approval going forward under the revised system.
The new rules are expected to reshape how forex services are offered in India, with a stronger focus on regulation, transparency, and controlled expansion.