Forex dealer license in india

Foreign Exchange Management Act FEMA stipulates that all foreign exchange transactions are india to be routed only through the entities that are license by the India Bank to undertake such transactions.

Such entities are defined as Authorised persons in Section 10 of the Act. Under current dispensation, such authorised person may be: A Money changer FFMCor c.

Any financial institution authorised for limited kind of transactions, depending on their activity, or. With the progressive liberalisation in foreign exchange related transactions common person can now undertake variety of current account transactions without approaching the Reserve Bank. A large segment of population is increasingly getting connected with forex transactions of an expanding nature on individual accounts. Taking into account the day-to- day needs of a common persons for undertaking various transactions, b tourists for better encashment services and c requests received from existing FFMCs there is a felt need for widening and rationalizing the intermediate tier of authorized persons which is licenced to undertake foreign forex transactions to meet the day-to-day needs.

These would cater to tourists for encashment and common persons for release of foreign exchange for medical treatment, education, employment, travel related transactions and in general a license variety of current account transactions that are not trade transactions.

Therefore, with a view to liberalising and rationalising the scope of activities currently undertaken by the authorized persons an dealer Group consisting of Shri H. Battacharya, CGM-I-C, DEIO, Shri G. Padmanabhan, CGM-I-C, DIT and Shri Vinay Baijal, CGM, FED was constituted to study the related issues and make recommendations keeping in view the need for enhanced as well as wider access and accompanying safeguards, especially reporting requirements.

The observations and recommendations of the Group are detailed in following paragraphs. The Bank has therefore wide discretion to authorise a person as AD or MC or OBU or in any other manner, forex all such persons would be known as 'authorised person. There should however be clear eligibility norms for the classification and the norms should have nexus with the object of classification.

Category of license Number Entities Major Activities Authorised Dealers. Urban Co-operative Bank - 2. All permissible current and capital account transactions Financial Institutions. Factoring Agencies — 5 Activities related to financing of international trade undertaken by these institutions Full Fledged Money Changers.

Specified non trade related current account transactions Total These requests were revisited by the Group in the light of on going liberalisation in foreign exchange transactions, convenience of the tourists, improved technology and with an object to rationalize the institutional structure and expand the number of entities eligible to undertake foreign exchange transactions, while ensuring appropriate safeguards against misuse.

The Group feels that there is a distinct growing demand to undertake current account foreign exchange transactions that are not related to trade but are required to meet miscellaneous needs of common person like fees and maintenance expenses of license, foreign exchange for medical treatment etc.

The Group, therefore, recommends that Reserve Bank may consider granting licences to certain entities to undertake some more transactions, in addition to what FFMCs are currently permitted, by authorizing them to undertake certain non-trade related current account transactions.

Such entities may be called Restricted Authorised Dealers Restricted ADs. Category of license Number Entities Major License 1 Authorised Dealers. Urban Co-op BankAll current and capital account transactions according to RBI directions issued from time-to-time. Factoring Agencies Activities incidental to financing of international trade related activities undertaken by these institutions.

No Change ii Category-II Upgraded FFMCs. Thomas Cook India Ltd. Specified non-trade related current account transactions as at para. Dealer for participation in global conferences and specialized training. Remittance under educational tie up arrangements with universities abroad. Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL etc. Employment and processing, assessment fees for overseas job applications.

Emigration and Emigration Consultancy Fees. Such transactions may not necessarily require opening and maintaining foreign currency denominated NOSTRO account with a bank dealer India. However, the Group recommends that to facilitate issuance of foreign currency draft etc. Eligibility Criteria for grant of Restricted AD RAD-Category II licence.

The Group has deliberated in detail the current dispensation available to various categories of authorized persons and in the light of regulatory framework under which each category of institutions is functioning the issue of granting them licence as a Restricted AD has been considered. The Group recommends that the following category of institutions could be considered for the purpose. Currently, a company with minimum capital of Rs.

Ilustratively, the criteria for upgradation of existing FFMC to RAD-Category II may include net owned funds Rs 10 crores; satisfactory functioning as FFMC for at least two years and credit report from their bankers.

Although, fresh FFMC licences are not being issued to UCBs, the existing licences are being renewed under the same conditions. The activities permitted under these licences only allow conversion from one currency to other currency.

Therefore, a beginning can be made by granting them licence as RAD-Category II. As on date there are RRBs - as on March, Further, currently the RRBs are undergoing financial restructuring and amalgamation.

The Group also notes that in terms of ownership the RRBs satisfy the criteria of 'fit and proper'. The sponsor banks have rich experience in foreign exchange transactions and the RRBs can draw upon the sponsor banks for training and skill up gradation, if needed.

Since the supervision of the RRBs dealer entrusted to NABARD the Reserve Bank may consider taking into account the recommendations of the NABARD also before taking a decision on the application for grant of RAD-Category II licence.

Proposed structure of the authorized persons would dealer as follows: Category of license Number Entities Eligibility Major Activities 1 Authorised Dealers.

Urban Co-op Banks No Change. All current and capital account transactions according to RBI directions issued from time-to-time. Factoring Agencies No Change. On case to case basis to facilitate the core activity of the institutions. Activities incidental to financing of international trade related activities undertaken by these institutions. Specified non-trade related current account transactions as at paragraph 6.

Other FFMCs, No Change. The Group notes that in adopting the proposed structure it is unlikely that it may result in limiting the present activities of any of the licenced entities. However, in the event that there is any entity which considers the proposed structure restrictive as compared to the current dispensationthe Group recommends that such entity may be granted special dispensation, on case by case basis, with a view to continuing their present status, as appropriate.

However, Group is of the view that all such special permission may be granted subject to annual review. However, the Reserve Bank may reserve the right to inspect when considered necessary. These may be made applicable to RADs-Category II also. The Group recommends that to begin with all RAD-Category II licences may forex issued only for ONE year subject to renewal. Forex I Authorised Dealers 87 FFMCs Maintaining foreign currency accounts with banks, correspondents abroad.

Entering into forward contracts and other risk management products on behalf of clients as also for own balance sheet management. Availing temporary overdrafts from the correspondent banks license activities related to negotiation of payment under the letter of credit, other payments etc. Extending pre and post-shipment credit facility. Clearing Corporation of India Ltd. Maintaining foreign currency accounts with a settlement bank outside India. Accept foreign currency deposits from Authorised Persons who are members of CCIL.

Avail one or license Lines of Credit from the settlement bank dealer India to facilitate the clearing operations. Access the domestic forex markets, either directly or through an Authorised Dealer, in case of default by any of the clearing members or for making remittances incidental to forex clearing and settlement operations. Provide import factoring, assuming india the relevant obligations enjoined on Authorised Dealers in respect of import transactions as per extant exchange control regulations.

Acceptance and release of GR Forms. Maintenance of Nostro Account balances commensurate with the business needs. Export factoring to be provided on 'with recourse basis' and forfaiting on 'without recourse basis'. Permitted to india the requests india for reduction in invoice value, ii payment of agency commission and iii write off of export proceeds from your exporter clients under extant rules and regulations as applicable to authorized dealer in foreign exchange. Remittance for educational tie up arrangements with universities abroad, examination fees etc.

Skip to main content. Search the Website Search. Home Forex Us Notifications Press Releases Speeches Publications Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Lectures Statistics Data Releases Database on Indian Economy. Home Publications Draft Forex. Draft Reports 87 kb Date: Dec 01, Licensing Policy for Authorised Persons: Liberalisation Foreign Exchange Management Act FEMA stipulates that all foreign exchange transactions are required to be routed only through the entities that are licenced by the Reserve Bank to undertake such transactions.

A Commercial bank ADor b. Any financial institution authorised for limited kind of transactions, depending on their activity, or d. Any other entity authorised by the Reserve Bank. Enhanced Access to Common Person 2. Legal Frame work 3. Category of license Number Entities Major Activities Authorised Dealers 87 Commercial Banks - 84; State Co-operative Bank - 1; Urban Co-operative Bank - 2.

Specified non trade related current account transactions Total 4. Category of license Number Entities Major Activities 1 Authorised Dealers Commercial BanksState Co-op BankUrban Co-op BankAll current and capital account forex according to RBI directions issued from time-to-time.

No Change ii Category-II Upgraded FFMCs Select UCBs Select RRBs Thomas Cook India Ltd. Fee for participation in global conferences and specialized training, e. Medical Treatment abroad, h. Disbursement of crew wages, i. Remittance under educational tie up arrangements with universities abroad, k.

Employment and processing, assessment fees for overseas job applications, m. Emigration and Emigration Consultancy Fees, n. Eligibility Criteria for grant of Restricted AD RAD-Category II licence The Group has deliberated in detail the current dispensation available to various categories of authorized persons and in the light of regulatory framework under which each category of institutions is functioning the issue of granting them licence as a Restricted AD has been considered.

Proposed Structure Proposed structure of the authorized persons would be as follows: Category of license Number Entities Eligibility Major Activities 1 Authorised Dealers Commercial Banks, State Co-op Bank, Urban Co-op Banks No Change 1 License to conduct Banking business in India. Transitional Arrangements The Group notes that in adopting the proposed license it is unlikely that it may result in limiting the present activities of any of the licenced entities.

KYC and Anti Money Laundering norms Miscellaneous The Group recommends that to begin with all RAD-Category II licences may be issued only for ONE year subject to renewal. All Months January February March April May June July August September October November December.

Events Public Dealer Engagements RBI Clarifications Right to Information Act Related Links. RBI's Core Purpose, Values and Forex Citizens' Charter Timelines for Regulatory Approvals Complaints Contact Us. Follow RBI RSS Twitter Videos. Licensing Policy for Authorised Persons: Category of license Number. Commercial Banks - 84; State Co-operative Bank - 1; Urban Co-operative Bank - 2.

All permissible current and capital account transactions. Financial India — 4 EXIM, IFCI, SIDBI ,CCIL Factoring Agencies — 5.

Activities related to financing of international trade undertaken by these institutions. Full Fledged Money Changers Department of Post Urban Cooperative Bank — 9 India FFMCs — Specified non trade related current account transactions. Commercial BanksState Co-op BankUrban Co-op Bank. Restricted Authorised Dealers RADs.

Financial Institutions EXIM, IFCI, SIDBI ,CCIL and Factoring Agencies. Upgraded FFMCs Select UCBs Select RRBs Thomas Cook India Ltd. Full Fledged Money Changers FFMCs. Department of Post Urban Coop Bank Other FFMCs. Commercial Banks, State Co-op Bank, Urban Co-op Banks. No Change 1 License to conduct Banking business in India. Financial Institutions ; EXIM, IFCI, SIDBI ,CCIL and Factoring Agencies. No Change On case to case basis to facilitate the core activity of the institutions.

Department of Post Urban Coop BankOther FFMCs. No Change 1 Registered under Indian Companies Act. SIDBI, EXIM and IFCI 1. Accept foreign currency deposits from Authorised Persons who are members of CCIL 3. Maintenance of close relatives abroad. The two most important features of the india are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search — well, at least we think so but you be the judge.

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