Overview of FFMC License
All the Individuals or Business Entities who want to deal in Foreign Currencies need to obtain FFMC License from the Apex Bank, i.e., RBI. Such a license gives the holders the authority to purchase foreign exchange from NRIs (Non Resident Indians) and sell the same for business and travel purposes to the Indians visiting abroad.
Based on the provisions and stipulations of Section 10 of the FEMA 1999, it shall be noted that only an AMC (Authorised Money Changer) is eligible to deal in the activities concerning Money Changing and Foreign Exchange.
Some of the firms and hotels have also been provided Full Fledged Money Changer License by the RBI to deal in Foreign Currency, Traveller’s Cheques, and Coins. The same is done to avoid the difficulties faced by the foreign tourists and visitors.
Role of Authorised Money Changers in Forex Transactions
Authorised Money Changers play a pivotal role in the transactions concerning Foreign Exchange. The Reserve Bank of India grants approval to the banks in the form of Licenses to deal in activities of foreign exchanges. The said license is granted to only those banks which are well equipped to carry out foreign exchange transactions in India.
Also, it shall be noted that other than banks, certain financial institutions are granted authorisation by the apex bank to undertake prescribed types of foreign exchange transactions that are incidental to their main business.
Benefits of FFMC License
The key benefits of the Full Fledged Money Changer License are as follows:
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Different Kinds of Full Fledged Money Changer License
The different kinds of Full Fledged Money Changer License are as follows:
Conditions for Applying Money Changer License in India
The conditions to be fulfilled for applying for Money Changer License in India are as follows:
Regulatory Framework for Authorised Money Changer License
The Reserve Bank of India has the utmost authority to issue Authorised Money Changer License. Also, the Apex Bank can prescribe directions and guidelines for the associated matters of AMC License as follows:
What are the RBI Permitted FFMC Activities?
The RBI permitted FFMC Activities are as follows:
Documents Required for Applying for FFMC License
The documents required for applying FFMC License are as follows:
Procedure for Obtaining Full Fledged Money Changer License from RBI
The steps included in the procedure for obtaining Full Fledged Money Changer License from RBI are as follows:
- Submit an Application to the Reserve Bank of India
In the first step of the procedure, the applicant company needs to submit an application along with the required documents at the regional office of the Apex Bank in the format prescribed. Annexure-II deals with the format prescribed by the RBI.
- Fulfil the Fit and Proper Criteria
For acquiring an Authorised Money Changer License from the Reserve Bank of India, a company needs to fulfil a Fit and Proper Criteria. Consequently, the Board of Directors needs to undergo the process of Due Diligence to confirm that the prescribed Fit and Proper criteria is duly met.
Further, one of the main functions of the Fit and Proper Criteria is to assist in determining the expertise, integrity, qualifications, and previous track record of the person proposed to be appointed as Director.
Key Requirements of the Fit and Proper Criteria
The key requirements of the Fit and Proper Criteria can be summarised as:
- The proposed individual shall not be more than the age of 70 years;
- He/ she must not be a Member of Legislative Assembly;
- Must not have any history of Fraudulent Practices;
- He/ she should not be an MP (Member of Parliament);
- Should not have any previous Criminal Record;
- Shall not have received any Sanction or Permission from Regulatory Bodies;
Obtain Clearance from Empowered Committee Clearance
In the next step of the procedure of acquiring an AMC License, the directors of the applicant company require to obtain a clearance from the EC (Empowered Committee). However, it shall be noted that the same will be based only on proper verification.
Review by the Reserve Bank of India
Now, the Reserve Bank of India will review the application and documents submitted by the company. If the RBI is satisfied that the application and documents furnished successfully fulfil the fit and proper criteria, it will issue an Authorised Money Changer or FFMC License to the applicant within a period of 2 to 3 months.
Commencement of Business Operations
After obtaining a Full Fledged Money Changer license, the business entity requires to commence its commercial operations within a period of 6 months, beginning from the date of the issuance of the license.
Further, the said entity requires to submit a duplicate copy of the Possession Certificate, Shop and Establishment License, and Lease Agreement with the Reserve Bank of India before the commencement of business operations.
What are the Post Approval Requirements of FFMC License?
The Post-approval Registration Requirements of Full Fledged Money Changer License are as follows:
Concept of Franchisees
The term Agents or Franchisees means there is more than one intermediary authorized by the RBI to engage in foreign exchange activities.
Further, Authorized Dealer Category-I Banks, Authorized Dealers Category-II, and FFMCs are allowed to appoint their Agents and Franchisees to engage in the money changing activities.
The points to remember in this regard are as follows;
Revocation of Authorised Money Changer License
In India, the utmost authority to revoke/ suspend/ or cancel an issued Authorised Money Changer License is with the Reserve Bank of India. The same is possible in the situations as follows:
Further, it shall be noted that the Apex bank reserves the right to modify/ change/ or revoke any of the prevailing terms, conditions, or regulations concerning AMC License in India.
Process for Renewal of the FFMC License in India
To renew the expired FFMC or Full Fledged Money License, the directors of the License Holder Company requires to submit an application for the renewal one month prior to the expiry date of such license.
However, if, in case the said company is not able to submit the application for renewal within the stipulated time frame, the RBI will then reject it whenever filed.
It shall be considerate to mention that the previously issued license will remain in existence till the time company receives the rejection notice. However, the said company will not be eligible to furnish the application for license renewal after the expiry date.
Different Records and Registers to be maintained by FFMC License Holder
An Authorised Money Changer needs to maintain the Registers and Records in respect of their money changing transactions as follows:
Daily Summary and Balance Book
The daily summary and balance book needs to be for the following:
The data register is required to be made for the following:
Frequently Asked Questions
Authorized entities that have got the approval from Reserve Bank of India to enter into Foreign Exchange Business in consonance with section 10 of Foreign Exchange Management Act, 1999.
The central objective of FFMC to do business is to ensure the customers that they will get effective and best in the market services despite the competitive environment. Also, FFMC endeavors to widen the foreign exchange facilities to tourists visiting India, and even the NRIs will be benefitted.
The first and foremost step for the company applying for FFMC License is that it should get itself registered with the Companies Registrar under Companies Act, 2013. The object clause should state that the primary activity of the entity will be the Forex currency exchange. At the same time, the company should ensure that the corporation is free from any legal cases, and no ongoing case is pending with the Department of Enforcement or Revenue Intelligence.
Yes, FFMC License must go through the renewal process every year by submitting the application documents to RBI.
No, there is zero possibility to work as a money changer without getting the FFMC Licensing.
Under Section 10(1) of FFEMA, 1999, Application in the prescribed form, as well as required documents, must be submitted towards the respective Regional Office of Foreign Exchange Department of RBI.
- The three types of FFMC Licenses are classified as-
- Authorized Dealer Category- 1(Banks)
- Authorized Dealer Category- 2(Authorized Dealers)
- Full Fledge Money Changers (FFMC)
No, the franchisees are allowed to carry out limited money changing activities as per the master circular of RBI.
Submit all these copies to the Regional Office of RBI before commencing business
- A copy of lease agreement
- A copy of registration under shops
- Rent receipt or Establishment Act
- Business Visits
- Private Visits
- Forex Prepaid Cards