RBI Notifies FEM Authorised Persons Regulations 2026, Tightens Forex Norms

The Reserve Bank of India has notified the Foreign Exchange Management (Authorised Persons) Regulations, 2026, to strengthen oversight of forex activities. The regulations set out revised eligibility, operational, and compliance requirements for entities dealing in foreign exchange.

They also restrict unauthorised activities by making prior RBI approval mandatory for all forex operations. The changes are aimed at improving transparency, consistency, and regulatory control across the foreign exchange ecosystem.

Authorisation Requirements Under the New Rules

Under the updated regulations, no person or entity can undertake any foreign exchange activity without authorisation from the RBI. The central bank has been given explicit powers to grant, refuse, suspend, or revoke such authorisations.

Activities conducted beyond the scope of approval will be treated as violations under the Foreign Exchange Management framework. The RBI stated that these measures are intended to prevent regulatory gaps and unauthorised market participation.

FFMC Licence Applications and Restrictions

The RBI has clarified that it will not consider any fresh applications for Full-Fledged Money Changer licences under the new framework. Only FFMC applications that are already pending with the central bank will continue to be processed.

This effectively limits the entry of new standalone money changers into the formal forex system. The move signals a preference for consolidating oversight rather than expanding the number of licensed entities.

Turnover Norms for AD Category-II Entities

As per the notification, AD Category-II entities must achieve a minimum foreign exchange turnover of ₹50 crore within 2 years of authorisation. Failure to meet this threshold may result in regulatory action, including cancellation of approval.

The RBI indicated that the turnover requirement is designed to ensure operational seriousness and financial viability. This criterion also helps align authorised entities with the scale of activity expected under regulated forex operations.

Discontinuation Of Franchisee Model And New Framework

The existing franchisee model for foreign exchange business has been discontinued under the new regulations. In its place, the RBI has introduced a Forex Correspondent framework to govern outsourced forex services.

All existing franchisee arrangements must be phased out within a period of 2 years from the date of notification. This transition is expected to bring greater accountability and direct supervision over customer-facing forex transactions.

Read More: RBI Distributes Portfolios to Its 4 Deputy Governors.

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Conclusion

The Foreign Exchange Management (Authorised Persons) Regulations, 2026, represent a significant tightening of India’s forex regulatory regime. By restricting unauthorised activities and raising compliance benchmarks, the RBI has reinforced its supervisory role.

The new rules also provide clear consequences, including licence revocation and a 1-year bar on reapplication for rejected or cancelled entities. Overall, the regulations aim to streamline operations while strengthening regulatory discipline in the foreign exchange market.

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