Exchange Control Manual

Date : May 31, 2005
Authorised dealers in foreign exchange

Authorised dealers in foreign exchange

6. (a) The Reserve Bank may, on an application made to it in this behalf, authorize any person to deal in foreign exchange. (b) An authorization under this section shall be in writing and -

    1. may authorize transactions of all descriptions in foreign currencies or may be restricted to authorizing dealings in specified foreign currencies only;
    2. may authorize dealings in all foreign currencies or may be restricted to authorizing specified transactions only;
    3. may be granted to be effective for a specified period, or within specified amounts;
    4. may be granted subject to such conditions as may be specified therein.

(c) Any authorization granted under sub-section (1) may be revoked by the Reserve Bank at any time if the Reserve Bank is satisfied that, -

    1. it is in the public interest to do so; or
    2. the authorized dealer has not complied with the conditions subject to which the authorisation was granted or has contravened any of the provisions of this Act or of any rule, notification, direction or order made thereunder:
    3. Provided that no such authorization shall be revoked on the ground specified in clause
    4. unless the authorized dealer has been given a reasonable opportunity for making a representation in the matter.

(d) Any authorized dealer shall, in all his dealings in foreign exchange and in the exercise and discharge of the powers and of the functions delegated to him under section 74, comply with such general or special directions or instructions as the Reserve Bank may, from time to time, think fit to give, and, except with the previous permission of the Reserve Bank, an authorized dealer shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of his authorization under this section.

(e) An authorised dealer shall, before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declarations and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of, any contravention or evasion of the provisions of this Act or of any rule, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorised dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person, report the matter to the Reserve Bank.

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