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Foreign exchange or forex transactions in India are regulated by the RBI and the FEMA framework. The Foreign Exchange Management Act, 1999, governs the country’s foreign exchange regulations. The RBI introduced new Foreign Exchange Management (Authorised Persons) Regulations, 2026.
These new rules bring transparency to the forex business, strengthen compliance, and monitor forex activities. Earlier, the rules were different in many places. Now, the RBI has brought them into a more structured framework.
These Foreign Exchange Management (Authorised Persons) Regulations, 2026, will affect banks, NBFCs, FFMC license holders, exporters, importers, and various businesses dealing in forex. RBI wants India’s forex system to be more organized, secure, and compliance-driven. This will reduce unauthorised forex activities and improve market discipline.
RBI’s new Foreign Exchange Management (Authorised Persons) Regulations, 2026, is a framework that determines who can deal in foreign exchange in India and how they can do so. No person or entity can do forex business without the RBI’s permission.
The RBI’s new Foreign Exchange Management (Authorised Persons) Regulations, 2026, have brought together many previous fragmented guidelines into a structured system. This will reduce confusion in the forex market and help to maintain compliance.
RBI now has clear powers to approve, reject, suspend, or cancel the license of authorised entities. If any entity does Forex activity outside the permission, then it will be considered a FEMA violation.
This framework is making India’s forex ecosystem more compliance-driven. Along with this, emphasis has been placed on increasing governance, accountability, and operational transparency. This will make the forex sector more regulated and reliable.
This category mainly includes licensed banks. They can handle current account and capital account transactions under FEMA. Large forex transactions, international remittance, and foreign exchange services are usually handled by these entities.
This category can include banks, NBFCs, FFMCs, and eligible Forex correspondents. However, they should have at least 2 years of experience and an average forex turnover of ₹50 crore.
They can handle non-trade current account transactions and foreign trade transactions up to ₹25 lakh. RBI has made the turnover and compliance rules more stringent for this category.
This category is mainly for those entities whose core business involves forex dealing. They can also offer innovative forex-linked products.
However, the type of forex activities they can do will be mentioned separately in the RBI’s authorisation letter.
FFMCs or Full Fledged Money Changers can deal in foreign currency and traveller’s cheques. They can also work as MTSS agents.
However, the RBI will not issue any fresh FFMC licenses. Only applications that are already pending will be considered.
RBI is moving away from standalone FFMC and the old franchisee model. Instead, more emphasis is being placed on the Forex Correspondent framework so that monitoring and accountability are better.
As per the new forex rules, the applicant entity must be a registered company under the Companies Act, 2013. In addition, the company’s Memorandum of Association (MOA) must mention forex activities.
RBI has set minimum net worth requirements for different categories.
RBI has also emphasized “fit and proper” criteria. The promoters, directors, and Key Managerial Personnel (KMPs) should have good backgrounds and financial credibility. At least 50% of the directors or KMPs should have experience in the financial services sector.
If an entity is under investigation by the Enforcement Directorate (ED), then it will have to submit a No Objection Certificate (NOC) from the Directorate of Enforcement. RBI wants to ensure that only compliant and trustworthy entities are operating in the forex sector.
As per RBI’s new forex rules, all new authorisation applications will have to be submitted through the PRAVAAH portal. RBI has launched this online system to make the application process faster and more transparent.
Renewal applications have to be submitted at least 2 months before the expiry of the license. If the renewal application is submitted on time, the existing authorisation will remain valid till RBI approval or rejection.
RBI can reject the application for certain reasons.
For example:
If the license of an entity is revoked or rejected, then a cooling-off period of 1 year will be applicable. No new application can be made during that period.
Under the new framework, authorised entities are required to obtain a license and maintain regular compliance. RBI is now laying more emphasis on continuous monitoring. All authorised persons will have to maintain the required net worth and turnover regularly.
There are also some other important compliance rules. If there is a change in ownership or control of more than 50%, prior approval of the RBI will be required. Director or KMP changes will have to be reported within 30 days of the end of the financial year.
If an ED investigation starts, RBI will have to be informed within 30 days. If a new branch is opened or a branch is closed, an update will have to be given on the APConnect portal within 7 days.
RBI wants to increase operational transparency with these new Foreign Exchange Management (Authorised Persons) Regulations, 2026. This will strengthen accountability in the forex sector and reduce unauthorised activities.
Forex Correspondents or FxCs are agents who provide forex-related services on behalf of authorised forex entities. RBI has given more importance to this framework in the new rules.
AD Category-I and AD Category-II entities will now be able to appoint FxCs through the principal-agent model.
In addition, non-bank AD entities will have to follow RBI outsourcing risk management rules.
Monitoring was often weak in the previous franchisee model. But accountability and supervision have been made much stronger in the new FxC framework. This will increase customer protection and make forex transactions more transparent.
RBI wants forex services to operate in a controlled environment. This framework is a big step in that direction.
RBI has completely closed fresh franchisee arrangements through the new forex rules. Now forex business cannot be started under the franchisee model.
The franchisee agreements will have to be closed within the next 2 years. However, existing franchisees can transition to the Forex Correspondent framework.
RBI believes that fragmented forex operations make it difficult to maintain monitoring and compliance. So, they are moving towards a more structured and regulated system.
RBI has also closed new standalone FFMC licenses. Only serious and compliant entities will be in the market. These changes strengthen tighter supervision, operational transparency, and customer protection.
Have a look at the significant changes in the FOREX sector in 2026-
RBI has introduced new Export-Import (EXIM) regulations, which will be effective from October 1, 2026. This new framework has simplified the reporting process. Export realization procedures have also been simplified. Now, a principle-based compliance system will be followed. This will make it much easier for businesses to understand the rules.
RBI has fixed the NOP-INR limit of banks up to USD 100 million per business day. This limit will help reduce speculative trading. Besides, forex risk management will be stronger. This will make it easier to control market volatility to some extent.
RBI has also brought changes to the External Commercial Borrowing (ECB) framework. Through the new rules, foreign funding access has been made easier for corporates. This will enable businesses to manage overseas borrowing more smoothly.
RBI has stopped banks from offering certain INR-related NDF contracts. It has also imposed restrictions on the rebooking of cancelled forex derivatives. This move reduces unnecessary speculation and keeps the Indian rupee stable.
Banks will have to handle treasury operations and forex risk management more carefully for the new forex rules. Operational changes will have to be made for RBI’s NOP limits and derivative restrictions. This will reduce speculative trading to some extent, but banks will have to increase internal monitoring.
The compliance burden for NBFCs and other forex entities is now much higher. They will have to maintain stronger governance. It will be mandatory to follow the turnover requirement and reporting standards regularly.
Some benefits have also come for exporters and importers. The new EXIM framework has simplified the reporting process. More clarity will now be available on forex transactions. This will make compliance management comparatively easier.
RBI has stopped issuing new standalone money changer licenses. Existing players will now have to move towards the forex correspondent model.
Overall, it is now important for businesses to review their forex policies, internal controls, and compliance systems as per the new rules.
Businesses will need to do proper planning to follow the new RBI forex rules. Following the steps below will make it easier to maintain compliance.
Important Action Points
RBI is now monitoring forex activities. So, non-compliance may result in penalties, license cancellation, or restrictions under FEMA. Businesses need to take a proactive approach. Even small mistakes can create big compliance issues in the future.
FEMA and RBI compliance rules can sometimes be complicated for businesses. Especially, forex-related approvals, reporting, and documentation are not easy to maintain properly.
Enterslice can provide professional support to businesses here.
Our Services
Businesses can avoid unnecessary delays and penalties with expert guidance. Many companies make compliance mistakes due to a lack of understanding of the rules. Enterslice can help businesses reduce that risk.
We create a smooth and compliant forex operation framework through proper planning, documentation, and regulatory support.
RBI’s new Foreign Exchange Management (Authorised Persons) Regulations, 2026 have brought various changes in the forex sector in India. The new rules increase transparency, strengthen compliance, and maintain better control over forex activities.
Banks, NBFCs, exporters, importers, and forex businesses will have to follow the new rules carefully for this new framework. Reporting, documentation, and compliance have become more important than ever before.
Businesses that deal with foreign exchange need to update their systems and policies on time. Otherwise, they may face penalties or regulatory problems in the future.
Maintaining compliance is much easier with the right guidance. Enterslice can help businesses with FEMA compliance, RBI approvals, and forex-related legal support.
RBI has introduced new Foreign Exchange Management (Authorised Persons) Regulations, 2026. These rules are to increase transparency and compliance in the forex sector. No entity will be able to carry out forex activities without RBI approval. RBI is emphasizing more monitoring, reporting, and operational control. This will reduce unauthorised forex dealings, and the entire system will be more organized.
Entities providing foreign exchange-related services will need RBI authorisation. These include banks, NBFCs, money changers, Forex correspondents, and other Forex service providers. According to the new rules, doing forex business without RBI approval will be considered a FEMA violation. So, it is very important for entities handling forex transactions to maintain proper registration and compliance.
AD Category-II is a category of RBI authorised forex entities. This category can include banks, NBFCs, FFMCs and eligible Forex Correspondents. They should have at least 2 years of experience and an average annual forex turnover of ₹50 crore. They can handle non-trade current account transactions and foreign trade transactions up to ₹25 lakh. RBI has also introduced stricter reporting and compliance rules for this category.
No, RBI has stopped issuing fresh FFMC licenses under the new forex rules. Only applications that are already pending will be considered. RBI is moving towards a more regulated Forex Correspondent framework instead of the standalone money changer model. This will maintain better monitoring, accountability, and compliance control in the forex sector.
Forex Correspondent or FxC framework is a system based on the principal-agent model. Here, AD Category-I and AD Category-II entities can appoint agents to provide forex services. Under this framework, FxCs can work with multiple principals. All transactions are reflected in the principal. This makes monitoring easier and accountability increases. RBI is trying to bring more transparency through this model compared to the old franchisee system.
RBI has set different minimum net worth requirements for different forex categories. Category Minimum Net Worth:1. AD Category-II: ₹10 Crore 2. AD Category-III: ₹2 Crore 3. Single Branch FFMC: ₹25 Lakh 4. Multiple Branch FFMC: ₹50 Lakh These requirements allow only financially stable and serious entities to operate in the forex sector.
If a forex entity does not follow RBI rules, then RBI can take action against it. This may include suspending authorisation, cancelling the license or rejecting the application. In some cases, a cooling-off period of 1 year may also apply. The entity will not be able to apply again during that period. There may also be monetary penalties under FEMA.
The new EXIM regulations have simplified the reporting process for exporters and importers. Export realization and import compliance procedures have now become more structured. It will be easier for businesses to understand and follow the rules with the principle-based framework. It will also increase clarity on forex transactions, thereby reducing operational confusion and compliance risk to some extent.
RBI has introduced minimum turnover requirements for authorised forex entities. 1. AD Category-II: ₹50 Crore annual turnover within 2 years 2. FFMC: ₹10 Crore annual turnover This requirement is only for active and financially capable entities in the market. RBI wants authorised entities to maintain serious business operations and follow compliance standards.
Enterslice provides professional support to businesses to manage FEMA and RBI compliance. We provide services like RBI approvals, AD category registration, FFMC compliance, ECB advisory, and regulatory filings. Sometimes, forex rules can be difficult to understand, and documentation can be difficult to maintain. Enterslice helps businesses simplify the compliance process. This helps to avoid penalties, delays, and regulatory issues.
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