In plain words: you rarely deal with the RBI directly — your bank does it for you. 'Authorised Dealers' are the banks licensed to handle foreign exchange, and they are your first checkpoint for FEMA compliance.
What an Authorised Dealer is
An Authorised Dealer (AD) is a bank (or entity) licensed by the RBI to deal in foreign exchange. When you send money abroad, receive foreign funds, open an NRI account or remit for investment, it flows through an AD bank, which applies the FEMA rules.
What AD banks do for you
- Execute inward and outward remittances within the permitted categories and limits.
- Operate NRE, NRO and FCNR accounts.
- Apply documentation and purpose codes to each transaction.
- Handle reporting to the RBI (for example, on foreign investment and borrowings).
Why they matter to your compliance
Because the AD bank checks each transaction, it is both a facilitator and a filter. If your paperwork or purpose does not fit the rules, the bank will ask questions or decline — which actually protects you from an inadvertent contravention. Working with your AD, and giving correct information, is the simplest way to stay compliant.
What they will ask for
- The purpose of the remittance (with a purpose code).
- Supporting documents — invoices, admission letters, agreements.
- Declarations (for example, an LRS declaration) and, where needed, a CA certificate (Form 15CA/15CB) for certain foreign payments.
When the bank can't help
Some transactions need RBI approval beyond the AD's delegated powers, or fall outside the automatic route. The AD will tell you when an approval or a different route is required — take advice early so a deal is not stuck.
Frequently asked questions
Can I do forex without an AD bank? Generally no — permitted forex dealings go through authorised persons.
Why did my bank ask so many questions? It must apply FEMA rules and purpose codes — it is protecting you too.
What is Form 15CA/15CB? A declaration and CA certificate required for certain remittances abroad.
How Vakil Help Desk helps
Vakil Help Desk advises on FEMA compliance, remittances, NRI matters, foreign investment and compounding — and represents clients in ED FEMA proceedings. If you have a cross-border transaction or a FEMA notice, we can help you get it right.
This article is for general legal awareness, not individual legal advice. FEMA rules, limits and forms are revised by the RBI and the Government from time to time, and the right treatment depends on your facts and the current position. Please consult a professional before acting on a cross-border transaction.