Eligible NBFCs can get licence to offer forex transactions to individuals: RBI

The Reserve Bank of India (RBI) Tuesday said systematically important non-deposit taking NBFCs offering foreign exchange transactions on individual accounts will be eligible to obtain Authorised Dealer (AD) Category-II licence from it.

AD-Cat II means entities that are authorised by the RBI to deal in foreign exchange for specified purposes. These include upgraded full-fledged money changers (FFMCs), select regional rural banks, select urban cooperative banks and certain other entities.

The RBI noted that a large segment of population is increasingly getting connected with forex transactions on individual accounts.

To increase the accessibility and improve the efficiency of services extended to the public for their day-to-day non-trade current account transactions, the RBI said "it has been decided that systemically important non-deposit taking investment and credit companies shall be eligible for Authorized Dealer- Category II (AD-Cat II) licence".

The central bank further said NBFCs having a minimum investment grade rating are eligible for the licence.

It also said NBFCs offering forex serives should have a board-approved policy on managing the risks (including currency risk) and handling customer grievances arising out of such activities.

A monitoring mechanism, at least at monthly intervals, shall be put in place for such services, it added.

The eligible NBFCs desirous of undertaking AD-Cat II activities should approach the RBI for the licence.

The different types of Authorised Money Changers are AD-Cat I Banks AD-Cat II and FFMCs.