Authorised Dealers (AD)

The term Authorized Dealer (AD) refers to any type of financial institutions who has received authorization from the RBI as a dealer to involve in trading of foreign currencies. The transaction of the authorized dealer should have been conducted in pursuance of a legal mode and under the framework established by the law. Authorized dealers are nothing else but the market pronounced name of Authorized Money Changer (AMC).

In addition to Authorized Dealers category-

  1. Banks (AD Category –I Banks) and Authorized Dealer Category –
  2. (Ads category- II), Full Fledged Money Changers (FFMCs) are authorized by Reserve Bank to deal in Foreign exchange for specified purposes, to widen the access of foreign exchange facilities to residents and tourists while ensuring efficient customer service through competition.

Authorised Dealer (AD) Code

AD Code is a 14-digit numerical code you get from the bank with which you have a current account to run your import-export business. The code comes printed on a document with the bank’s letterhead, in a format that is prescribed by DGFT. A bank must deal in or be an authorised dealer of foreign currency in order to be able to grant an AD Code. The purpose behind an AD Code, is to ensure that foreign currency transactions in an exporter’s current account are from legal trade. Exporters must register their AD Code with the port or airport from where they intend to ship their goods abroad. If the shipment is to be dispatched from an inland container depot (ICD), AD Code registration is required for that facility as well as the port attached to it. An AD Code registration has a lifetime validity. However, if an exporter ships from more than one port, whether in the same state or in different states, they must register the AD Code for each of these ports. In this case, the AD Code for each of these ports will be different.

Different categories of Authorised Dealers

There are three types of authorised dealers, depending upon the type of institutions. These three types are classified under there categories.

Category I: Category I Authorised Dealers are select banks who can carry out all permissible current and capital account transactions as per directions issued from time to time. There are 106 authorised dealers of Category -I as per the RBI regulations. 

Category II: Category II are select entities to carry out specified non-trade related current account transactions and all the activities permitted to Full Fledged Money Changers and any other activity as decided by the Reserve Bank.

Category III: Category III ADs are select financial and other institutions (as Authorised Dealers Category-III) to carry out specific foreign exchange transactions incidental to their business / activities.

Full-Fledged Money Changer: Another category, outside the Authorised Dealers, who can deal in a lesser way in foreign exchange dealing are the Full Fledged Money Changers. They have less functionalities vis a vis ADs.

FFMCs are select registered companies as Full-Fledged Money Changers (FFMC) to undertake purchase of foreign exchange and sale of foreign exchange for specified purposes viz. private and business travel abroad.

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