{"id":56815,"date":"2022-03-23T10:52:11","date_gmt":"2022-03-23T05:22:11","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=56815"},"modified":"2022-06-09T14:41:08","modified_gmt":"2022-06-09T09:11:08","slug":"authorised-person-under-fema","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/authorised-person-under-fema\/","title":{"rendered":"All you need to know about Authorised Person under FEMA"},"content":{"rendered":"

It is impossible to think that the Reserve Bank can do all transactions in the foreign exchange on its own. Therefore the RBI delegates its powers to an authorised person under FEMA who deals in foreign exchange and securities. It is a broad topic that requires proper understanding hence this article aims to simplify the concept of authorised person under FEMA.<\/p>\n\n\n\n

Who is an authorised person?<\/h2>\n\n\n\n

As per Section 2(c) of the Foreign Exchange Management Act 1999, authorised person means an authorised dealer, money changer, off shore banking unit or any other person who has been authorised under Section 10(1) of the FEMA to deal in foreign exchange and foreign securities.<\/p>\n\n\n\n

Authorised person under FEMA<\/h2>\n\n\n\n

The categorisation of authorised persons under FEMA is as follows:<\/p>\n\n\n\n
Category<\/strong><\/td>Entity<\/strong><\/td>Activities permitted<\/strong><\/td><\/tr>
Authorised Dealer-I<\/td>Commercial banks, state co-operative banks, urban co-operative banks<\/td>All current & capital account transactions according to RBI directions<\/td><\/tr>
Authorised Dealer-II<\/td>Upgraded FFMCs, Cooperative banks, regional rural banks, others<\/td>Specified non-trade related current account transactions and activities permitted to FFMC<\/td><\/tr>
Authorised Dealer-III<\/td>Some selective Financial and other institutions<\/td>Transactions incidental to the foreign exchange<\/td><\/tr>
Full fledged money changers<\/td>Department of Post, Urban Co-operative Banks, Other FFMC<\/td>Purchase of foreign exchange & sale for private & business visits abroad.<\/td><\/tr><\/tbody><\/table>\n\n\n\n

How to become an authorised dealer under FEMA?<\/h2>\n\n\n\n

Authorised persons have the authorisation from the Reserve Bank of India to deal in foreign exchange. You can submit an application along with relevant documents to the RBI in order to become an authorised person. Even if you are approved as an authorised person, you do not have a free hand in foreign exchange. You will have to furnish documents of your transactions to the Reserve Bank as and when they are asked for as per the category of authorised person.<\/p>\n\n\n\n

The FEMA 1999[1]<\/a><\/sup><\/strong>, states that RBI may authorise any person to be known as authorised person, on an application made to the RBI in this behalf, to deal in foreign exchange or foreign securities as an authorised dealer, money changer or off shore banking unit. Such authorisation shall be in writing, and such authorisation shall be revoked in case the RBI believes that it is in public interest to do so or where the authorised person has failed to comply with the conditions upon which the authorization was granted. However, a reasonable opportunity of being heard shall be provided before revoking such authorisation.<\/p>\n\n\n\n

Activities by authorised dealer- Category II<\/h2>\n\n\n\n

Authorised dealer-II can undertake the following transactions-<\/em><\/p>\n\n\n\n