A new FX plan has been introduced by RBI to facilitate transactions. Details are available here

 A new FX plan has been introduced by RBI to facilitate transactions. Details are available here

 A new FX plan has been introduced by RBI to facilitate transactions. Details are available here

The RBI has suggested creating a new class of money changers (the Foreign Exchange Correspondents Scheme under the Scheme) in order to improve the ease of conducting business. These money changers may use any agency model via approved dealers in Categories I and II to transact money.

The Foreign Exchange Management Act (FEMA) license system for Authorized Persons was recently implemented by the Reserve Bank of India (RBI). Stated differently, new regulations are being drafted to let approved individuals to act as money changers.

On June 8, 2023, it was first mentioned in the Statement on Development and Regulatory Policies.

The Foreign Exchange Management Act's draft licensing structure for approved individuals has since been posted on the RBI website.

Regarding the proposed framework, the banking regulator has requested views and suggestions.

Forex Correspondent Program

The Reserve Bank of India has suggested creating a new class of money changers (Foreign Exchange Correspondents under the Scheme) in order to facilitate commercial transactions.

As to the draft released on the RBI web, these money changers may become foreign exchange correspondents of Category-I and Category-II approved dealers, enabling them to conduct money exchange operations via any agency model.

It's noteworthy to note that these organizations won't need to apply to the Reserve Bank for permission.

The major AD's records will record transactions completed by foreign exchange correspondents acting on behalf of the AD.

Foreign exchange correspondents and any customers they deal with will have wide license to trade in foreign exchange as allowed by the FCS.

For both personal and business travel abroad, foreign exchange correspondents will be able to purchase and sell foreign currency notes and travelers' checks.

As long as they follow the guidelines set out by the Principal AD, they are permitted to issue prepaid cards with foreign currencies.

An entity may not, under any circumstances, have correspondent relationships in foreign currency with more than one major AD. Furthermore, forex correspondents shall only transact forex business with the general public or its primary AD.

ongoing power

Currently, businesses who want to operate as AD Category-II are granted permission for a year at a time, and then it may be extended for another year or up to five years.

However, it is advised to permanently renew the current authorization as AD Category-II in order to lessen the regulatory burden and improve ease of doing business. This will depend on meeting the updated eligibility requirements outlined in the new framework.