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Who are the FFMCs “Full-fledge Money Changer?”

FFMC License holders are the authorized Entities who purchase foreign exchange from non-residents and residents of India and sell that foreign exchange for private and business travel purposes only to the people visiting abroad.

As per the provisions of Section 10 of the Foreign Exchange Management Act, 1999, authorized money changers are the only entities in India dealing in money changing activities and providing the necessary foreign exchange services.

For the purpose of removing the difficulties faced by the foreign visitors and tourists, certain firms and hotels have also been provided the registration to deal in the foreign currency notes, coins and traveler's cheques subject to the directions issued by the RBI from time to time.

There are three different types of FFMC License that are categorized as:

  • Authorised Dealer Category -I Banks (AD Category–I Banks),
  • Authorised Dealers Category - II (ADs Category–II) and,
  • Full Fledged Money Changers (FFMCs).

What are the Conditions to be satisfied to apply for FFMC License in India?

  • The entity applying for a Full-fledged money changer License should be registered under the Companies Act 2013.
  • The Company should have a minimum net owned fund of Rs.25 lakhs to apply for a single branch license and Rs.50 lakhs for a multiple branch license.
  • The object clause of Memorandum should reflect the activity of money changing to be pursued by the Company.
  • There should not be any civil/criminal case pending against the company with the Department of enforcement of the Department of Revenue Intelligence.
  • After obtaining the FFMC License the company should carry out its business activity within six months from the date of issuance of Forex License and should intimate the RBI.

What is the Regulatory Framework for FFMC License?

The RBI is the governing authority and it has issued the below-mentioned guidelines for the purpose of regulating the operation and Licensing process FFMCs:

  • Guidelines for issue of new FFMC license.
  • Renewal of FFMC license.
  • branch licensing.
  • approval for the appointment of agents/franchisees and.
  • Know Your Customer (KYC) / Anti Money Laundering (AML).
  • Combating of Financing of Terrorism (CFT) and.
  • Guidelines for Authorized Persons (AP).

What are the Documents required for making the application for Full Fledge Money Changer License or FFMC License?

  • Copy of the Certificate of Incorporation.
  • Memorandum and Articles of Association containing a provision for undertaking money changing business or an appropriate amendment to this effect.
  • Copy of the latest audited accounts with a certificate from the Statutory Auditors certifying the Net Owned Funds as on the date of application.
  • Copies of the audited Balance Sheet and Profit & Loss Account of the company for the last three years, wherever applicable.
  • Confidential Report from the applicant's banker in a sealed cover.
  • Details of sister / associated concerns operating in the financial sector, like NBFCs, etc.
  • A certified copy of the board resolution for undertaking money changing business.

What is the procedure for getting the FFMC license from RBI?

  • A detailed application is submitted to the concerned regional office of the RBI.
  • 'Fit and proper' criteria for the applicant/Director of applicant FFMCs is checked and if everything as per the satisfaction of RBI the Full Fledge money changer license shall be issued within a period of 2-3 months.

Note: If any case by any law enforcing authorities, is initiated/pending against any company / its directors, the company will not be considered as 'fit and proper' and its application will not be considered as eligible for FFMC license.

  • Clearance by the Empowered Committee.
  • Reserve Bank’s decision in the matter of granting approval or otherwise will be final and binding.

What is the Post Approval Requirement of FFMC License?

  • A copy of the registration under Shops & Establishment Act or any other documentary evidence such as rent receipt, a copy of lease agreement, etc. should be submitted to the Regional Office concerned of the Reserve Bank before the commencement of the business.
  • New FFMCs should carry out their activities as per the instructions specified by the Reserve Bank from time to time.
  • FFMCs should at each of its business place display a copy of the money changing license issued by the Reserve Bank of India.
  • FFMCs should put in place a system of Concurrent Audit of the transactions undertaken by them.
  • All FFMCs are required to submit their annual audited balance sheet to the respective Regional Office of the Reserve Bank.

Renewal of FFMC License in India

An application for the renewal of a full-fledged money-changers license shall be made before one month from the expiry date of the license. No application for renewal of a money changer's license shall be made after the expiry of the license.

What all are the activities an FFMC can undertake?

  • FFMCs can enter into franchise agreements at their option for the purpose of carrying on Restricted Money Changing business i.e. conversion of foreign currency notes, coins or travelers' cheques into Indian Rupees.
  • FFMCs/franchisees may freely purchase foreign currency notes, coins and traveler's cheques from residents as well as non-residents.
  • FFMCs may sell Indian Rupees to foreign tourists/visitors against International Credit Cards/International Debit Cards and take prompt steps to obtain reimbursement through normal banking channels.
  • FFMCs may sell foreign exchange for the following purposes:
    1. Private visits.
    2. Business Visits.
    3. forex pre-paid cards.

What are the records and registers to be maintained by the FFMCs?

(i) AMC shall maintain the following Registers in respect of their money-changing transactions:

(a) Daily Summary and Balance book of:

  1. Foreign currency notes/coins in form FLM 1.
  2. Travelers' cheques in form FLM 2.

(b) Register of:

  1. purchases of foreign currencies from the public in form FLM 3.
  2. purchases of foreign currency notes/coins from authorized dealers and authorized money changers in form FLM 4.
  3. sales of foreign currency notes/coins and foreign currency travelers' cheques to the public in form FLM 5.
  4. sales of foreign currency notes/coins to authorized dealers / Full Fledged Money Changers / overseas banks in form FLM 6.
  5. travelers’ cheques surrendered to authorized dealers / authorized money changers / exported in form FLM 7.

What are the situations and circumstances in which the FFMC license can be revoked by the RBI?

The Reserve Bank reserves the right to revoke the license granted to any FFMC at any time if the Reserve Bank is satisfied that

(a) It is in public interest to do so or

(b) The FFMC has failed to comply with any condition or any of the provisions of the Foreign Exchange Management Act, 1999

Who are the Franchisees?

There is one more intermediary authorized by RBI to deal in foreign exchange, i.e., Agents and Franchisees.

Authorized Dealer Category – I Banks, Authorized Dealers Category - II and FFMCs can appoint their Agents and Franchisees to deal in money changing activities. Following are the important points in this regard: 

  • The AD Category – I Banks,
  • AD Category - II banks and
  • FFMCs have been permitted by Reserve Bank to enter into franchise agreements at their option for the purpose of carrying on Restricted Money Changing business. Any person proposing to opt for franchisee of any AMC may do so after entering into the franchise agreement.

Following are the important points in this regard:

  • A franchise can be any entity which has a place of business in India.
  • An entity should have a minimum Net Owned Funds of Rs.10 lakh.
  • Franchisees can undertake only restricted money changing business.
  • A Franchisee Agreement shall be executed between the parties.
  • The franchisees should display the names of their franchisers, exchange rates and that they are authorized only to purchase foreign currency, prominently in their offices.
  • The foreign currency purchased by the franchise should be surrendered only to its franchiser within 7 working days from the date of purchase.
  • The maintenance of a proper record of transactions by the franchise.

Role of Authorized Dealers in Foreign Exchange

Authorized dealers play an important role in Forex transactions. The RBI grants authorization in the form of licenses to deal in foreign exchanges to the banks which are well equipped to undertake foreign exchange transactions in India. The RBI has granted authorization to certain financial institutions to undertake specific types of foreign exchange transactions incidental to their main business.

FAQ on Full Fledged Money Changer (FFMC)

Entities that are approved by the Reserve Bank of India to do money changing business according to the section 10 of the Foreign Exchange Management Act, 1999.

Entities other than the bank can be a Full Fledged Money Changer. They come under the Authorized Dealer Category II whereas the Banks are Authorized Dealer Category I.

Any entity which is enlisted under the Companies Act, 2013 are qualified to apply for the FFMC permit in India.

Yes, any entity registered under the Companies Act having a base net owned asset of Rs 10 lakhs and one of the main object clause of the company is money changing business that can get the franchise permit from an existing FFMC.

Yes, the permit should be renewed each year by giving the application documents to the Reserve Bank of India.

No, the franchise is permitted only for the limited money changing activities according to the master circular of RBI.

Authorized Money Changers are the entities that are authorized by the Reserve Bank of India under the section 10 of the Foreign Exchange Management Act 1999. An AMC is a Full Fledged Money Changer authorized by the Reserve Bank to deal in Foreign exchange for specified purposes.

The application in the prescribed form along with the required documents should be submitted to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant fails.

The Reserve Bank reserves the right to revoke the license granted to an AMC at any time if the Reserve Bank is satisfied that:/p>

  1. it is in public interest to do so or
  2. The AMC has failed to comply with any condition subject to which the authorization is granted or has contravened any of the provisions of the Foreign Exchange Management Act, 1999 or any rule, regulation, notification, direction or order made thereunder.

Reserve Bank also reserves the right to revoke the authorization of any of the offices for infringement of any statutory or regulatory provision. The Reserve Bank may at any time vary or revoke any of the existing conditions of a money changer’s license or impose new conditions.

The FFMC should commence its operations within a period of six months from the date of six months from the date of issuance of the license. A copy of the registration under Shops &Establishment Act or any other documentary evidence such as rent receipt, a copy of lease agreement; etc should be utilized to the Reserve Bank before the commencement of the business.

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