India's central bank has formally ended a structural feature of the country's forex system that had stood for over two decades: beginning with a new regulatory framework that took effect this spring, licensed non-bank entities can now process trade-linked international payments for India's vast MSME economy — and settle those payments directly, without routing every transaction through a bank.

WSFx Global Pay Limited, the BSE-listed fintech operating under the brand GlobalPay, GlobalPay disclosed expanded RBI license to the stock exchange on Monday that the Reserve Bank of India has expanded its Authorised Dealer Category-II license under the Foreign Exchange Management (Authorised Persons) Regulations, 2026 — commonly called FEMA 2026. The disclosure makes GlobalPay one of the first non-bank forex platforms to gain trade remittance access under the framework, following EbixCash World Money's landmark authorization on July 21.

For India's roughly 63 million registered MSMEs — whose exports account for more than 43% of the country's total export value — that change means something concrete: a compliant, regulated alternative to their bank's foreign exchange desk for trade payments of up to ₹25 lakh (approximately $26,000 USD; conversions are approximate) per transaction.

What FEMA 2026 Actually Changed — and Why Banks Dominated Before

India's foreign exchange market is structured around a hierarchy of authorized entities. At the top sit AD Category-I institutions — commercial banks with full-scope forex dealing authority. Below them are AD Category-II entities, historically permitted to process personal remittances, student payments, and travel-related forex, but explicitly excluded from anything touching trade. The legal basis for this structure is under Notification No. FEMA 401/2026-RB, which formalized and expanded the permitted-activity categories for each tier.

That exclusion was not incidental. Trade remittances require the ability to hold foreign-currency settlement accounts, process export and import documentation, and comply with the RBI's transaction-monitoring and FEMA compliance requirements in real time — a compliance architecture that historically only banks could build and sustain. The result was that a small exporter in Surat or an importer in Ludhiana with a ₹15 lakh (~$16,000 USD) trade invoice had one compliant option: go to a bank, accept the bank's timeline, and pay the bank's forex spread.

FEMA 2026, issued under Notification No. FEMA 401/2026-RB on April 30, 2026, and published in the Official Gazette on May 6, fundamentally altered that structure. Under the new regulations, AD Category-II scope expansion now permits these entities to handle all permissible non-trade current account transactions (except gifts and donations), foreign trade transactions up to ₹25 lakh (~$26,000 USD) per transaction, and family maintenance remittances — categories that were previously the exclusive province of banks and Category-I institutions.

The framework also introduced stricter entry standards. Non-bank AD entities must meet prescribed net worth thresholds and achieve minimum annual forex turnover of ₹50 crore (~$525,000 USD) within two years of authorization. And the long-running Full-Fledged Money Changer license — the standalone currency-counter model that proliferated across Indian cities for decades — is now in managed decline: no new FFMC applications are being accepted, and the model is being replaced by a formal Forex Correspondent Scheme that operates as a principal-agent structure under AD-I and AD-II principals.

The Technical Mechanism: Why Nostro Accounts Are the Real Story

The most consequential technical change in the new framework is not the ₹25 lakh trade limit — it is what that limit implies about settlement architecture.

Before FEMA 2026, even a licensed AD-II entity that processed an international payment had to route it through a bank's settlement infrastructure. The payment would originate with the AD-II entity, move to an Authorized Dealer Category-I bank, which would then route via SWIFT to a correspondent bank abroad, which would credit the foreign beneficiary through its domestic payment network. Each hop in that chain added time and cost.

EbixCash World Money's expanded license, announced July 21, explicitly noted that the company holds RBI approval to maintain EbixCash Nostro account RBI approval — a capability the company's compliance chief described as "historically reserved for banks."

A Nostro account is a foreign-currency account held by one financial institution at a bank in another country. When a trade payment originates, the entity debits its Nostro account at a partner foreign bank, and the foreign bank credits the beneficiary through its local payment network — removing the need for an additional Nostro account settlement mechanism correspondent bank intermediary. For an Indian MSME exporter, fewer hops in the payment chain means lower fees and faster settlement. For a non-bank entity, Nostro access means it can genuinely compete with banks for trade flows rather than simply serving as a pass-through to a bank's infrastructure.

GlobalPay's expanded license positions it to build toward the same settlement capability. The company's banking partnerships with major Indian lenders and its digital compliance infrastructure give it a foundation for the Nostro-supported settlement model that the FEMA 2026 framework now formally permits for non-bank players.

How Does the Tech Work? Inside GlobalPay's FPaaS Model

GlobalPay is not simply a forex house that happened to receive a regulatory upgrade. The company has spent years building what it describes as a GlobalPay Forex Platform as Service — a B2B technology model in which its RBI-licensed compliance and payment infrastructure is made available to third parties via API or co-branded portal.

Under the FPaaS model, a partner — a bank, a travel company, an education platform, or another forex distributor — can offer GlobalPay's currency exchange and remittance capabilities to its own customers under a co-branded interface, with GlobalPay handling the RBI compliance, KYC verification (using Video Customer Identification Process, or V-CIP), A2 form processing (the RBI's mandatory outward remittance declaration), and operational risk. The partner sets its own markup on top of GlobalPay's interbank rates; GlobalPay charges no upfront or monthly fees, taking a share only when transactions complete.

The company's GlobalPay Connect distribution program, launched this year, extends this logic to the forex network layer: it enables AD-II dealers, Full-Fledged Money Changers, and banks to distribute GlobalPay's GlobalPay Connect distribution program multi-currency forex cards as authorized partners. With FEMA 2026 now phasing out the standalone FFMC model, some of those FFMC operators will need to transition to a Forex Correspondent arrangement — exactly the kind of principal-agent model GlobalPay's platform is structured to serve.

GlobalPay: Forty Years to This Moment

GlobalPay is not a venture-funded challenger bank. WSFx Global Pay Limited — formerly Wall Street Finance Limited — was incorporated in 1986 and became the first listed company in India to obtain an FFMC license in 1991. In 2006, it became the first FFMC in India to be upgraded to an AD-II license history.

For fiscal year ended March 31, 2026, the company reported GlobalPay FY26 revenue operations of ₹107.94 crore (~$1.13 million USD) — up 25% year-over-year — with net profit after tax of ₹6.14 crore (~$64,000 USD), a 77% jump from the prior year. Nearly 60 percent transactions now automated by year-end, with the company targeting 80% digital by the end of FY27.

With 21 branches across India, over 850 corporate clients, and 500-plus channel partners, GlobalPay's network is substantially smaller in physical footprint than EbixCash World Money — which operates more than 100 branches across 70 cities. But GlobalPay's asset-light, API-first model gives it a different growth lever: distribution through technology partners rather than owned branches. Chief Executive Srikrishna Narasimhan, commenting in May when the company announced its FY26 results, described the FEMA 2026 framework as opening "a transformational milestone for the AD-II industry" and noted that the Forex Correspondent Scheme creates "the foundation for scalable distribution-led growth."

What Happens to India's Currency Counter Network?

One structural consequence of FEMA 2026 is the managed wind-down of the Full-Fledged Money Changer model. For decades, standalone forex counters — at airports, in shopping districts, near tourist areas — operated under FFMC licenses. They could exchange physical currency; they could not process remittances.

Under FEMA 2026, no new FFMC licenses are being issued. Existing licenses are valid until expiry but not renewable. Current franchisee arrangements — under which larger forex operators had networks of sub-agents — must transition to the new Forex Correspondent structure within two years, or be discontinued.

The practical consequence is consolidation. Smaller FFMC operators that cannot meet the compliance thresholds for the new Forex Correspondent model face an exit from the market. The beneficiaries are established AD-II entities like GlobalPay, which can absorb FFMC client relationships and serve as principals under the new correspondent scheme — extending their effective network reach without proportional investment in physical infrastructure.

The RBI's signal is unambiguous: the future of regulated forex distribution in India belongs to well-capitalized, digitally capable entities with robust compliance infrastructure, not standalone currency counters. What India's banks have dominated — trade-linked international payments — is now formally open to the strongest non-bank players that can meet the new bar.

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Frequently Asked Questions

What is FEMA 2026 and what changed for Indian MSMEs?

FEMA 2026 refers to the Foreign Exchange Management (Authorised Persons) Regulations, 2026, issued by the RBI under Notification No. FEMA 401/2026-RB in April 2026. The key change for MSMEs is that licensed Authorised Dealer Category-II entities — non-bank forex platforms like GlobalPay and EbixCash — can now process trade-linked international payments of up to ₹25 lakh (~$26,000 USD) per transaction. Previously, any payment connected to imports or exports had to go through a bank or AD Category-I institution. MSMEs with smaller trade invoices now have a regulated non-bank FEMA 2026 alternative.

What is a Nostro account and why does it matter for non-bank trade payments?

A Nostro account is a foreign-currency account held by a financial institution at a bank in another country, which enables international payment settlement without physical presence abroad. When an entity holds a Nostro account, it can debit that account directly to credit a foreign beneficiary — skipping the additional correspondent bank intermediary that adds fees and delays to traditional SWIFT-based payments. EbixCash World Money was the first AD-II entity to gain EbixCash Nostro account trade remittance capability, making it the first non-bank in India capable of settling trade remittances directly. GlobalPay's expanded license positions it to build toward the same capability.

Can GlobalPay handle all MSME trade payments, or are there limits?

The FEMA 2026 framework caps trade remittances processed by AD Category-II entities at ₹25 lakh (~$26,000 USD) per transaction. MSMEs with individual trade invoices above that threshold still need to route those payments through a bank or AD Category-I institution. The cap covers a broad range of small-and-medium export/import transactions but excludes larger commercial deals. Additionally, AD-II entities must meet minimum annual forex turnover of ₹50 crore (~$525,000 USD) within two years of authorization — a compliance bar designed to screen out undercapitalized operators. Full details on the trade remittance limits under FEMA are available in the official regulatory explainer.

What happens to the standalone forex counters (FFMCs) that exist today?

The FEMA 2026 framework is phasing out the Full-Fledged Money Changer model. No new FFMC applications are being accepted. Existing licenses remain valid until expiry but are not renewable. Current franchisee networks — sub-agent arrangements under which larger forex operators distributed services through smaller storefronts — must transition to the new Forex Correspondent structure within two years. FFMC operators that cannot meet the requirements for the Forex Correspondent model will effectively exit the regulated forex market. The RBI's intent is to consolidate the market around fewer, better-capitalized entities with more robust compliance infrastructure. More on the FFMC phase-out under FEMA is detailed in RBI's published guidance.