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Microlesson · 5-min read

Definition of Authorised Person — Section 2(c)

# Authorised Person — Section 2(c) of FEMA

## Meaning

An Authorised Person is an individual or entity authorised by the Reserve Bank of India under Section 10 of FEMA to deal in foreign exchange or foreign securities.

## Categories of Authorised Persons

#CategoryExamples / Role
1Authorised Dealer (AD)Banks authorised by RBI to deal in forex — e.g., scheduled commercial banks like SBI, HDFC Bank.
2Money ChangerEntities authorised to undertake cash purchase/sale of foreign currency — e.g., Full-Fledged Money Changers (FFMCs).
3Off-shore Banking Unit (OBU)A branch of an Indian bank operating in a foreign jurisdiction or SEZ that deals in forex — e.g., a branch of SBI in the US.
4Other persons authorised u/s 10Any other person specifically authorised by RBI under Section 10 to deal in forex.

## Why this Matters

Only an Authorised Person can lawfully deal in foreign exchange. Dealing in forex through any unauthorised channel (hawala etc.) is a contravention of FEMA.

## Visual

```

RBI ---authorises u/s 10---> Authorised Person

|

+----------------+-----------+-----------+

| | | |

Authorised Money Off-shore Other persons

Dealer Changer Banking Unit authorised u/s 10

(Banks) (FFMCs) (OBU)

```

Worked example

### Example 1

Example: A retail customer wants to convert ₹ into USD for a foreign trip. They must approach an Authorised Person — typically an Authorised Dealer (bank) or a Money Changer. Approaching an unauthorised entity is a FEMA contravention.

### Example 2

Example: J.P. Morgan's Mumbai branch dealing in forex is an Authorised Dealer; SBI's London branch is an Off-shore Banking Unit (a branch of an Indian PRI authorised to deal in forex outside India).

⚠️ Common exam mistakes

  • Believing all banks are automatically authorised dealers — only banks authorised by RBI under Section 10 are.
  • Treating a Money Changer the same as an Authorised Dealer — Money Changers deal only in cash purchase/sale, not the full range of forex transactions.
  • Forgetting that OBUs are a separate category of Authorised Person.
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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