# Section 2: Authorised Person

An Authorised Person under FEMA is a person authorised by the RBI to deal in foreign exchange or foreign securities. The Act provides an inclusive definition covering four categories:

## Categories of Authorised Persons

Category	Meaning	Example
Authorised Dealer	Entities authorised to handle full range of forex transactions	Commercial banks (e.g., SBI, HDFC)
Money Changer	Entities authorised for limited currency-exchange functions	FFMCs (Full-Fledged Money Changers), e.g., Thomas Cook
Off-Shore Banking Unit (OBU)	Banking units operating in Special Economic Zones / dealing in foreign currency	Branch of SBI in a SEZ; J.P. Morgan branches set up as OBUs
Person authorised u/s 10	Any other person authorised by RBI under Section 10	Co-operative banks given limited dealer status

## Why This Definition Matters

Only Authorised Persons can legally deal in foreign exchange. A resident wanting to remit funds abroad must do so through an Authorised Person — not directly. The definition therefore identifies the legitimate channels for forex transactions.

Worked example

### Example 1

Example 1: Mr. X wants to send USD 50,000 to his son studying in the US. He must route this through an Authorised Dealer Bank (say, ICICI Bank) — he cannot remit directly using hawala or informal channels.

### Example 2

Example 2: SBI sets up an Off-Shore Banking Unit at SEZ Mumbai dealing only in foreign currency with non-residents → this OBU is an Authorised Person.

⚠️ Common exam mistakes

Treating ALL banks as Authorised Dealers — only banks specifically licensed by RBI under Section 10 qualify.
Confusing Money Changers with Authorised Dealers — Money Changers have limited powers (typically currency exchange only).
Forgetting that the definition is inclusive — RBI can authorise other persons under Section 10.

Bare-Act text Section 2(c) · Foreign Exchange Management Act, 1999 · click to expand

"Authorised person" means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under sub-section (1) of section 10 to deal in foreign exchange or foreign securities.

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Section 2 - Definition of Authorised Person

Worked example

⚠️ Common exam mistakes