BTL 924 - Classification of Authorised Dealers (ADs)

 

The Banking Tutor’s Lessons

BTL 924                                                                                30-07-2026

Classification of Authorised Dealers (ADs)

Authorised dealers in foreign exchange under the Foreign Exchange Management Act (FEMA) in India are classified into Authorised Dealer Category-I Banks, Authorised Dealers Category-II, and Authorised Dealers Category-III. These entities are approved by the Reserve Bank of India (RBI) to manage foreign currency and transactions.

Authorised Dealer Category-I (AD Category-I)

• Entities: Commercial banks (public, private, and foreign), state cooperative banks, and urban cooperative banks.
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• Permissions: Handle all permitted current account and capital account transactions, international trade payments, and general forex business.

Authorised Dealer Category-II (AD Category-II)

• Entities: Upgraded Full-Fledged Money Changers (FFMCs), select cooperative banks, and regional rural banks.
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• Permissions: Undertake specified non-trade current account transactions (like medical treatment, education, and travel remittances) and money-changing activities.

Authorised Dealer Category-III (AD Category-III)

• Entities: Select financial and specialized institutions.
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• Permissions: Carry out specific, limited foreign exchange transactions  that are directly incidental to their distinct business or institutional activities.

Full-Fledged Money Changers (FFMCs)

• Entities: Registered companies and urban cooperative banks separate from major banks.
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• Permissions: Purchase foreign exchange from residents and non-residents, and sell foreign currency specifically for private and business travel abroad. 

Sekhar Pariti

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