The Authorized Dealers are financial institutions, banks and other institutions authorized by the
Central Bank of the country is to deal in the foreign exchange. The dealer should do with the instructions and important directions given by the Reserve Bank given from period to period. While Foreign Exchange Regulation Act was in force, such directions of standing nature were available in the Exchange Central Manual issued by Reserve Bank as amended by its AD circulars. With the coming into effect of the FEMA, the Reserve Bank has issued a series of regulations under the Act. With regard to charging of quotation of rates, commission, etc., the authorized dealer should also comply with the rules of Foreign Exchange Dealers Association of India (FEDAI). Authorized dealers are classified by Reserve Bank into three major categories:
1 Banks in India by which they are authorized by the Reserve Bank plays a major portion of actual dealing in foreign exchange from the customers like importers, exporters and others receiving or making personal remittances. These banks are the first authorized dealers said by Reserve Bank. They are authorized to carry out all current account and capital account transactions are permitted by Reserve Bank of India from period to period.
2 These dealers are made up of fully upgraded fledged money changers, co-operative banks, regional rural banks and others. They can buy and sell foreign exchange for private and business visits abroad undertaken by residents, which is the function performed by a full-fledged money changer.
3 Dealers are comprised of selected financial and other institutions. They are permitted to carry out transactions incidental to the foreign exchange activities undertaken by them.