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Pankaj Tyagi
| Updated: 04 Oct, 2020 | Category: FFMC

Explore the List of Documents Required for FFMC License in India

Documents Required for FFMC License

Before we started with the title, it is pretty essential for us to know what FFMC means. Full Fledged Money Changer (FFMC) is referred to as authorized money changers registered under 10 (1) of the Foreign Exchange Management Act. It usually provides services related to foreign security and foreign exchange. According to the aforesaid act, any entity intends to commence an FFMC business required to avail of a registration for the same from the Reserve Bank of India. Otherwise, the entity will confront severe penalties as prescribed under the Act. In the write up we will demonstrate the information regarding Documents required for FFMC License in India.

Executing Framework for FFMC Registration

FFMC registration is a kind of legal permission that permits the entities to undertake the business of forex currency exchange or money changing activities. As per Section 10 (1) of the FEMA Act (Foreign Exchange Management Act), 1999, Authorized Money Changers (AMC) are the entities registered under the Reserve Bank of India[1] (RBI). These Authorized Money Changers are also regarded as Full Fledged Money Changers. Executing within the framework of law is one of the most challenging tasks for the NBFC. As per the aforesaid law, no entities are entitled to undertake the business of forex currency exchange in the absence of a valid FFMC license

FFMC License classified into Three Categories 

  • AD Category- I Banks (Authorised Dealer Category – I Banks)
  • AD Category- II (Authorised Dealer Category – II) 
  • Full Fledged Money Changers (FFMCs)

Read our article:An Outlook on Benefits, Types and Procedure of FFMC License

Documents required for FFMC license

FFMC license

The following list manifests the documents required for FFMC license

  • A copy of Certificate of Incorporation (COI) and Certificate of Commencement of Business of the Company. 
  • The MoA (Memorandum of Association) and AoA (Articles of Association) of the company stating the norms for performing money changing tasks or a proper amendment with the same effect.
  • Copies of the balance sheet (audited) as well as P&L account of the entity for the last 3 years prior to the date of application for the license. 
  • A declaration stating that no legal proceeding is pending against the company initiated by the Directorate of Enforcement (DoE) or Directorate of Revenue Intelligence (DRI) or any other statutory bodies.  
  • A sealed report prepared by the applicant’s banker. 
  • A declaration stating that the entity has deployed the relevant policies regarding CFT (Combating the Financing of Terrorism)/KYC (Know Your Customer)/AML (Anti-Money Laundering) before starting the business activities. 
  • Copy of board resolution for performing forex trading activities in India.

Note on Arrangement of Documents

An applicant seeking NBFC registration must arrange the aforesaid documents without any discrepancies. After completing this task, the applicant must submit a comprehensive application regarding FFMC registration to the RBI’s regional office. Keep in mind that the document described above will go along with the application. Upon receiving the application, RBI will evaluate the candidature of the applicant and the director on the basis of the fit and proper criteria. If they fail to meet the said criteria then RBI will reject the application. However, if the application is approved on the off chance then RBI will grant the registration certification within 2 to 3 months. 

Key points related to Documents Required for FFMC License in India

  • A Memorandum of Association (MoA) manifests the charter of an organization. It is a legal document that is drafted during the initial phase of the company to indicate its bonding with shareholders and it’s laid out the objectives for which the organization has been established. The company’s working protocols cannot go beyond the scope of the Memorandum of Association.
  • The Articles of Association (AoA) is a legal document that manifests the company’s purpose and its regulations regarding its operations. The documents show how the operation should be carried out within the company, including the drafting and handling of the fiscal records.
  • A Board resolution resolution is a documented version of the decisions taken by the BOD of a company. All the important decisions made by BOD are certified bypassing of the resolution.

Activities Performed by FFMC in India 

FFMCs are liable to perform the following tasks: 

  • FFMCs can opt for the franchise agreement to undertake the business of Restricted Money exchange such as the conversion of foreign currency notes into domestic currency at their convenience for undertaking the Restricted Money Changing business which comprises the conversion of coins or traveler’s cheques, foreign currency notes into (INR) Indian Rupees. 
  • An FFMC has permission to sell domestic currency to tourists or foreign visitors against the international debit and credit cards and respond promptly to obtain the reimbursement via normal banking channels. 
  • FFMCs as well as their franchises are liable to purchase traveler’s cheques, coins, or notes from the resident and non-resident. 
  • An FFMC is permitted to sell foreign exchange for purposes such as Business visit, Private visit, Forex pre-paid card. 

Conclusions

The applicant might not confront any obstacle in obtaining the registration certificate if it follows the aforesaid information correctly. NBFC is a kind of business that comes with plenty of legal and regulatory obligations. Entities that intend to pursue such business need to take the documentation part seriously because the chance of revocation of application is quite high here due to tight compliances.

In order to overcome those hassle, you must not hesitate to confront the professional who can help you out. At CorpBiz you can get the best of the professional-grade advice on different licensing or registration process. The company is engaged with providing legal services like FFMC License, FSSAI license, company registration, trademark registration, and many more.

Read our article:How to avail new FFMC license: Step by step guide

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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