India’s businesses and professionals now work across borders every day. SaaS exporters bill global clients, freelancers receive overseas payments, and exporters settle trade in multiple currencies. This growing global exposure makes foreign exchange transactions a routine part of business.
Because money moves across jurisdictions, you need regulated and secure channels. Unauthorised routes increase compliance risk and can disrupt cash flows. This is where RBI authorisation matters. The Reserve Bank of India permits only select institutions to manage complex forex activities under strict oversight.
An Authorised Dealer (AD) Category 1 bank plays a central role in this framework. With full RBI authorisation, these banks can manage most cross-border payment and currency requirements for businesses and individuals. For many users, an AD Category 1 bank becomes the main access point for safe and compliant foreign exchange transactions in India.
Key takeaways
- AD Category 1 banks are essential for compliant forex transactions, as they are the only institutions authorised by the RBI to handle the full range of cross-border payments and trade flows.
- Different authorised dealer categories serve different needs, but most exporters, freelancers, and SaaS businesses rely on AD Category 1 banks for scale and flexibility.
- Choosing the right banking and payment setup improves efficiency, helping you reduce delays, manage documentation, and maintain regulatory compliance.
- Solutions like the Razorpay MoneySaver Export Account complement AD Category 1 banking, making international collections simpler, more transparent, and easier to reconcile.
What Is an AD Category 1 Bank?
An AD Category 1 Bank is a commercial bank permitted by the Reserve Bank of India to carry out a wide range of foreign exchange transactions.
The term Category 1 indicates the highest level of RBI approval for foreign exchange activities. With this authority, such banks can support trade, services, and investment-related transactions.
They act as trusted intermediaries in India’s foreign exchange market, enabling global trade, inward remittances, and outbound payments in a compliant manner.
How Does AD Category 1 Differ From Other Authorised Dealer Categories?
Not all authorised dealers operate at the same level. The RBI defines clear limits for each category.
AD Category 1 banks
They can process all permitted current and capital account transactions, making them the most comprehensive option.
AD Category 2 entities
They have a narrower role, covering select non-trade current account transactions, certain FFMC-related activities, and forex prepaid cards, with scope gradually expanding.
AD Category 3 entities
They serve specific, incidental forex needs and may support current account transactions through tie-ups with AD Category 1 banks.
FFMCs
They only buy and sell foreign currency for travel-related purposes and do not handle trade or investment flows.
Pro Tip: Before choosing a bank or forex partner, check whether your transaction is correctly classified as a current or capital account transaction under FEMA. If it is, working with an AD Category 1 bank usually helps save time, reduce compliance queries, and avoid payment delays.
What Services Do AD Category 1 Banks Offer?
AD Category 1 banks support most cross-border financial needs for individuals and businesses. Their services cover everything from simple currency exchange to complex trade transactions, making international transactions smoother and compliant.
Buying and selling foreign currency
AD Category 1 banks allow you to convert one currency into another at authorised rates. They support routine needs such as travel, overseas subscriptions, and business payments, as well as larger trade-related conversions for exporters and importers.
Facilitating international remittances
- Enable you to send money abroad and receive funds from overseas clients or partners
- Ensure transactions follow FEMA rules, including purpose codes and limits
- Collect and verify basic documentation before processing transfers
Issuing letters of credit and bank guarantees
- Reduce risk in international trade by assuring payment to exporters
- Support importers by acting as a trusted financial guarantor
- Improve credibility when dealing with unfamiliar overseas counterparties
Managing export and import transactions
- Process export proceeds and import payments through authorised channels
- Track timelines for realisation of export earnings
- Handle mandatory reporting and trade-related documentation
Ensuring FEMA and RBI compliance
- Check the legitimacy and purpose of foreign exchange transactions
- Report required data to the RBI through prescribed systems
- Help prevent misuse, delays, and regulatory breaches
Explore Razorpay’s Global Payment Solutions
Who Are the AD Category 1 Banks in India?
Knowing which banks hold AD Category 1 status helps you choose a compliant partner for international payments. RBI updates the list from time to time, so it is wise to rely on recognised institutions when handling foreign exchange.
Public sector AD Category 1 banks
- State Bank of India
- Punjab National Bank
- Bank of Baroda
- Canara Bank
- Union Bank of India
- Indian Bank
- Bank of India
- UCO Bank
- Bank of Maharashtra
- Central Bank of India
- Indian Overseas Bank
- Punjab and Sind Bank
Private sector AD Category 1 banks
- HDFC Bank
- ICICI Bank
- Axis Bank
- Kotak Mahindra Bank
- IndusInd Bank
- Yes Bank
- Federal Bank
- DCB Bank
- City Union Bank
- Karnataka Bank
- Karur Vysya Bank
- RBL Bank
- South Indian Bank
- Dhanlaxmi Bank
- Bandhan Bank
- Tamilnad Mercantile Bank
Foreign banks with AD Category 1 licence in India
- Citibank N.A.
- HSBC Bank
- Standard Chartered Bank
- Deutsche Bank
- J.P. Morgan Chase Bank
- Barclays Bank
- DBS Bank India Limited
Prominent AD Category 1 Banks and Their Strengths
State Bank of India
Public sector bank with wide global reach and strong trade finance presence.
HDFC Bank
Private sector bank known for advanced digital forex and banking platforms.
ICICI Bank
Private sector bank with integrated export and import solutions.
Standard Chartered
Foreign bank with specialised cross-border banking expertise.
What Are the Benefits of Using an AD Category 1 Bank?
AD Category 1 banks offer clear advantages for businesses and individuals who want reliable, compliant, and efficient foreign exchange support.
Convenience and comprehensive services
An AD Category 1 bank works as a single point of contact for foreign exchange needs. You can manage currency exchange, international remittances, and trade-related services without coordinating across multiple institutions.
Competitive exchange rates
These banks participate actively in the forex market, which can help them offer competitive pricing. For exporters, freelancers, and global businesses, even small rate differences can impact final earnings.
Security and regulatory compliance
- Operate under RBI approval with continuous regulatory oversight
- Follow FEMA and RBI guidelines, reducing compliance and legal risk
- Protect funds through controlled and transparent processes
Speed and efficiency
Established systems and global networks help AD Category 1 banks process transactions faster, improving cash flow and planning.
How to Choose the Right AD Category 1 Bank?
Choosing an AD Category 1 bank directly affects how smoothly your cross-border payments and compliance processes run. The right bank should reduce friction rather than add to it.
Range of services
Ensure the bank supports your needs, whether you require basic remittances, export collections, import payments, or trade finance instruments like letters of credit and guarantees.
Forex pricing
Review exchange rates, conversion margins, and transaction charges to understand the true cost, especially for frequent transfers or high volumes.
Compliance support
A reliable bank provides guidance on FEMA requirements, purpose codes, and documentation, helping you avoid delays, queries, or regulatory issues.
Digital capabilities
A strong online platform helps you initiate transfers, upload documents, and track payment status without repeated branch visits.
Service responsiveness
Responsive support or a dedicated relationship manager helps resolve issues quickly when payments are time-sensitive.
Razorpay MoneySaver Export Account: Simplifying Global Business for Exporters and Freelancers
While AD Category 1 banks help keep forex transactions compliant, exporters and freelancers still face high forex costs, slow settlements, and fragmented tracking. Razorpay MoneySaver Export Account aims to solve these practical gaps by offering a simpler way to receive international payments into India while staying aligned with compliance requirements.
Key features and benefits
- Virtual foreign currency account in your name, allowing overseas clients to pay via local bank transfers in currencies such as USD, EUR, and GBP, with automatic conversion and settlement into your Indian bank account in INR
- Zero forex markup with a flat, transparent bank transfer fee, giving clarity on how much you receive after conversion
- Faster settlement timelines to your Indian bank account, helping improve working capital
- Automatic FIRC support, reducing manual follow-ups and simplifying documentation
- Unified dashboard for tracking, reconciliation, and reporting across international collections
- Built for Indian exporters and freelancers, including SaaS companies, consultants, and e-commerce sellers serving global customers
Receive international payments faster with Razorpay
Flat transfer fees, faster settlements, automatic FIRC, and unified reporting
across bank transfers and cards-built for Indian exporters and freelancers.
Conclusion
AD Category 1 banks form the backbone of India’s foreign exchange system. They enable you to move money across borders in a regulated and reliable way, while aligning transactions with RBI oversight.
From handling day-to-day remittances to managing trade and investment flows, these banks provide the widest set of forex services. Their role is not just operational. They ensure compliance with FEMA, reduce risk, and support confidence in cross-border dealings.
Choosing the right AD Category 1 bank directly shapes how smoothly you receive international payments, settle trade transactions, and stay compliant as you operate globally.
FAQs
1. What is an AD Category 1 Bank?
An AD Category 1 Bank is a commercial bank authorised by the RBI to handle all permitted foreign exchange transactions, covering both current and capital account activities.
2. How do AD Category 1 banks differ from other authorised dealers?
AD Category 1 banks have the widest authority and can handle all permitted foreign exchange transactions. Category 2 dealers are restricted to select non-trade current account transactions, while Category 3 dealers handle only specific, limited forex transactions.
3. Where can I find a list of AD Category 1 Banks in India?
The RBI publishes the official list of AD Category 1 banks on its website and updates it periodically, making it the most reliable source.
4. What transactions can I carry out through an AD Category 1 Bank?
You can manage remittances, trade payments, foreign currency exchange, letters of credit, bank guarantees, and export-import settlements.
5. What is FEMA’s role in relation to AD Category 1 Banks?
FEMA sets the legal framework for foreign exchange transactions in India. AD Category 1 banks ensure that every transaction they process complies with FEMA provisions and the regulatory directions issued by the RBI.
