There is a need for foreign exchange for the exporters and importers in the country who are spread over a vast geographical area. Even though, the authority of administer of foreign exchange in India is given to the Reserve Bank, it cannot able to control by itself and it is impossible to do the work individually. Therefore, provision has been made in the Act of Section 10, the person who enables to Reserve Bank to authorize is named as authorized person, where he can deals in the foreign exchange or in foreign securities, as an authorized dealer.
An authorized dealer must comply with general instructions and special orders of the Reserve Bank in all the Foreign Exchange Dealings. Before entering into a dealing or in any transaction he must clear from him customer whether the rules of Reserve Bank are not violated. If the authorized person is not satisfied with the transaction he should refuse in writing undertake.