Draft On Licensing Framework For Authorized Persons Under FEMA Released

The Reserve Bank of India (RBI) released a draft 'Licensing Framework for Authorized Persons (APs)' under the Foreign Exchange Management Act (FEMA), 1999. It added that it will also review the regulatory framework for APs. The RBI said that the Central Bank decided to rationalize and simplify the licensing framework for APs to effectively meet the emerging requirements of the rapidly growing Indian economy.

Foreign Exchange Management Act, 1999 (FEMA)

• Parliament passed the Foreign Exchange Management Act of 1999 (FEMA) during the winter session. It became operative on December 29, 1999. 
• This new Act is in accordance with the World Trade Organisation's (WTO) frameworks. 
• FEMA-1999 superseded the Foreign Exchange Regulation Act (FERA)-1973.
• The Enforcement Directorate (under the FEMA Act) headquarters is located in New Delhi.

Licensing Framework for Authorised Persons (APs)

• The central bank stated that all stakeholders are asked to provide comments or input on the draft framework by 31 January 2024.
• The draft standards are focused on rationalising the authorisation framework for money changers to expand the spectrum of services supplied by AD-Category II firms. 
• To successfully satisfy the developing needs of the rapidly growing Indian economy, the central bank chose to rationalise and simplify the licensing structure for APs.     
• The goal is to improve operational efficiency in providing foreign exchange services to visitors and businesses while preserving necessary safeguards. 

Reserve Bank of India(RBI) 

• The Reserve Bank of India was founded on 1 April 1935, in compliance with the terms of the Reserve Bank of India Act, 1934. 
• The Reserve Bank of India, though originally privately owned, has been completely owned by the Government of India since its nationalisation in 1949.
• The Reserve Bank's operations are governed by a central board of directors. 
• In accordance with the Reserve Bank of India Act, the board is appointed by the Government of India.
• The directors are appointed/nominated for a four-year term.