RBI's new forex rules to rationalise authorisation, expand services

The RBI has issued new Foreign Exchange Management Regulations to simplify the approval and renewal process for authorised persons. The move aims to expand forex service delivery through a principal-agent model while maintaining regulatory safeguards.

The Reserve Bank of India said on Wednesday that it has issued the Foreign Exchange Management (Authorised Persons) Regulations, 2026, which aim to rationalise the authorisation and renewal framework for authorised persons and extend the principal-agent model for the delivery of foreign exchange facility while maintaining appropriate checks and balances.

An RBI release said that the regulations have been issued after examining and suitably including feedback received from the stakeholders on the draft framework published on the Bank's website on December 26, 2023.

Simplifying Approvals and Expanding Access

The guidelines seek to simplify the approval framework for entities dealing in foreign exchange and expand the delivery of forex services through agents while maintaining regulatory safeguards.

Authorised persons are entities approved by the RBI to provide foreign exchange-related services such as currency exchange, remittances and overseas payment facilities.

The move is expected to simplify the approval and renewal process for such entities and improve access to foreign exchange services through authorised agents.

Principal-Agent Model with Safeguards

The "principal-agent model" allows authorised entities, such as banks or forex dealers, to appoint agents for providing certain foreign exchange services to customers.

The RBI, however, said the framework will continue to maintain "appropriate checks and balances" indicating that regulatory oversight and compliance requirements will remain in place.

The latest move is part of the RBI's efforts to streamline foreign exchange-related regulations and improve the delivery of forex services across the country.

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