RBI Seeks Public Input on Draft Licensing Norms for Foreign Exchange

RBI Seeks Public Input on Draft Licensing Norms for Foreign Exchange

VoM News Desk | December 27, 2023 | 10:31 AM IST | India | Follow on Google News

RBI Seeks Public Input on Draft Licensing Norms for Foreign Exchange (Representative Image)

RBI Seeks Public Input on Draft Licensing Norms for Foreign Exchange

The Reserve Bank of India (RBI) has initiated an open discussion for public feedback on proposed draft licensing regulations concerning foreign exchange (FX) operations in India. The objective behind this move, with a deadline set for January 31, 2024, is to ensure the new licensing norms are comprehensive, efficient, and aligned with both the current economic scenario and international best practices.

Rationalizing Authorization Structure
The draft ‘Licensing Framework for Authorised Persons (APs)’ under the Foreign Exchange Management Act (FEMA), 1999, aims to rationalize the authorization process for money changers and elevate the services provided by Category-II Authorized Dealers (ADs). This revamping intends to facilitate smoother foreign exchange transactions for users while reinforcing regulatory oversight.

Introduction of a New Money Changers Category
One of the significant highlights of the proposed norms is the introduction of a novel category of money changers termed Forex Correspondents (FxCs) affiliated with Category-I and Category-II ADs. This addition is designed to streamline foreign exchange transactions. These entities would not necessitate authorization from the Reserve Bank, thereby simplifying foreign exchange dealings. Additionally, the draft outlines the introduction of the Forex Correspondent Scheme (FCS), working on a principal-agency model where AD Category-I or AD Category-II will serve as the principal for the FxCs.

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