Time Required for Obtaining FFMC License in India
FFMC, an acronym used for Full-Fledge Money Changer, is the third category of Authorized Dealer (AD) of AMCs (Authorized Money Changers) apart from AD- Category 1 (Banks) & AD- Category 2. This license is issued to those business entities whose main purpose is to undertake all money changing activities and foreign exchanges.
This is issued by Foreign Exchange Department of Reserve Bank of India after all the verification by Nomination Committee or Empowered Committee. FFMCs should send regular financial reports to the FOREX department of RBI. To know more about FFMC license and its time requirements, let’s proceed,
FFMC License In India
As per the Section (10) of Foreign Exchange Management Act, 1999, Full-Fledge Money Changer License is a License granted by Authorized Money Changers whose main purpose is to offer foreign exchange services and to deal with money changing activities. The FFMC helps the foreign tourists and visitors to deal with currency exchange of coins, notes and cheques as per the directions prescribed by RBI.
No business entity shall be entitled to carry out the money changing business without this License issued by Reserve Bank of India. If any person found doing so, then he/she may face some legal issues as per the law.
Eligibility to obtain FFMC License in India
- The company should be registered with Registrar of Companies (RoCs) under Companies Act, 1956 or under Companies Act, 2013.
- The company should mention money change as the main activity in its Memorandum of Association.
- If the person wants to acquire FFMC License then he/she must conduct regular audits of the company to ensure that there will be no case pending with Department of revenue Intelligence & Department of Enforcement.
- If the person wants to run the business in the single branch then, he/she must have Rs25 lakh as owned funds and if the operations will be performed in different branches then the total owned funds must be Rs 50 lakh.
- The person has to carry out the business operation within 6 months after the issuance of Foreign Exchange License and should provide information to RBI.
Documents required for FFMC License in India
- Incorporation Certificate of the company
- Copy of Business commencement
- Past 3 years audit report in the form of P&L Account and Balance Sheet.
- MOA & AOA which state only money changing activities.
- Application form of Annexure-II by RBI circular which states all the money changing activities.
- Certification from Statuary Auditors regarding the owned funds of the company.
- Board Resolution copy for operating as money changer.
- Report regarding the company’s information, which could be sent to RBI by the Bank.
- Declaration regarding Anti-money Laundering, customer data etc. in a proper policy framework.
Process for obtaining FFMC License
Step-1 Filing Application
An applicant needs to file an application in the format prescribed by Foreign Exchange department of RBI and submit the application along with all above mentioned documents to the respective regional office.
Step-2 Fit & Proper Criteria
Then, RBI would do inspection about the director of FFMC “Fit & Proper Criteria”. This criterion includes the following:
- The director should undertake the procedure of due diligence which will determine whether he/she is suitable as a director in terms of qualification, experience, integrity and other “Fit & Proper Criteria” or not. The Board will also consider factors regarding the criminal record of proposed director, expulsion from professional bodies, civil actions related to personal debts etc. The Board will verify all the given information of directors from Self Declaration and from market.
- Board will undertake the process of due diligence at the time of appointment or renewal of directors.
- After signing the Declaration form, the Nomination Committee will decide whether the information provided in the Declaration form is accurate or not. If the information will be accurate then the Nomination Committee will accept it; otherwise, if any discrepancy found, then the application will be rejected.
- Directors of FFMCs should not be the Member of Parliament, Legislative Assembly and Legislative Council.
- If company wants to change the directors, then the application must be submitted to Foreign Exchange Department of RBI.
- The company should submit its annual report on 31march and should mention all changes in the application information, if any.
Step-3 Empowered Committee Clearance
The application for granting FFMC License will be proceeded further only if the empowered committee will give the clean chit after all the verification.
Step-4 RBI Decision
After all the approvals, it will all depend on the decision of RBI to grant the License or not.
Step-5 Submission of other Licenses
After RBI grants the License, the company before commencing its business should submit the Shop & Establishment License, Lease Agreement, Property Papers etc to their respective regional offices.
Step-6 Commencement of business
After obtaining the FFMC License and submitting all the Licenses, the company should commence its business within 6 months from the date of issuance of FFMC License and inform the regional office of RBI.
Time required to get FFMC license
After you submit all your required documents along with the application, then it will took approximately 2-3 months for RBI to grant FFMC License, if there will be no re-submission of the application. The company can commence its business operations within 6 months from the date of issuance of license. The duplicate copy of Lease agreement, possession certificate, Shop & Establishment License etc must be submitted to RBI before the commencement of business.
Can FFSCs appoint Franchisees for its operations?
There are several money changers available in India which is categorized as AD Category-I, AD Category-II and FFMCs. These Authorized Money changers can appoint Franchisees to operate all over the country. The main motive of these Franchisees is to provide money conversion facilities to all tourists, NRI, travelers etc at different places during holidays and extended hours. AMCs can appoint Franchisees (those who will operate on the behalf of AMCs) by signing Franchise Agreement which has some salient features. To operate as Franchise of any AMC, the Franchisee should have Rs10lakh as owned funds.
Features of franchise agreement
- The Franchisee should have a place to commence its business operations and have minimum owned funds of Rs10 lakhs. The main objective of any franchisee should be the conversion of money or activity associated with money changing.
- The Franchisors (Authorized Dealers, FFMCs) have the power to decide the time period of the agreement, the cost involved in opening a Franchisee, or the fees of the Franchise in the mutual agreement.
- Franchisee while commencing their business should mention the name of the Franchisor, address of the Franchisor and exchange rates which are followed by that parent Franchisor. Exchange rates would be same or closely related with each other in every Franchise opened by FFMCs.
- Franchisees have to maintain proper record of every transaction, which will be sent to Franchisors. Franchisors can do inspections and audits of their respective Franchises at least once or twice in a year.
- Franchisee should surrender the foreign currency to its franchiser within 7 working days from the date of purchase of currency.
Records should be maintained by FFMC
This form contains the summary and records of foreign currency notes/coins on daily basis.
This form contains the daily basis record of cheques received by travelers.
This contains the record related to the purchase of foreign currencies from the public.
This form contains all the records related to the purchase of foreign currency from Authorized Money Changers.
This form contains the sale of foreign currency notes/coins or cheques to the public.
This form contains all the records related to the sale of foreign currency notes, coins and cheques to Authorized Money Changers, overseas banks etc.
This form contains the sale of travelers’ cheques to AMCs, ADs, and FFMCs.
Renewal of FFMC License in India
The applicant should renew the FFMC License before a month of its expiry date. No request to restore the License shall be considered after its expiry.
If you want to start as FFMC then it involves huge investment as compared with other forms of business but after you started your operations as FFMC or Franchise of FFMC, then you can enjoy several benefits and huge profits. The process and documentation for obtaining this License from RBI are very back-breaking, also, it requires huge documentation. To obtain the FFMC License in India without any inconvenience, contact Swarit Advisors.