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The article provides a guideline for Regulatory Framework of FFMC License. The FFMC license is all about the Fully Fledged Money Changer License. The Foreign Exchange Management Act, 1999 has been vested with the power to deal in foreign exchange matters. Authorised Dealers are appointed under the Act, where they are empowered to deal with foreign exchange or money changing activities. It has been clarified that any person intending to do the business of FFMC needs to take the License for FFMC Registration. The Regulatory framework for FFMC has been adequately defined under section 10(1) of FEMA Act, 1999.
Fully fledged money changers are liable to carry out the following activities:
FFMC are allowed to buy coins and foreign currency from NRIs as well as residents.
The License has been defined under the regulatory framework of FEMA. The following are categories of FFMC:
The guidelines to enrol in Regulatory Framework for FFMC are as given follows:
The minimum net owned funds required for the consideration are as follows; the applicant minimum net owned funds should be computed as:
a) Owned Funds (Paid Up Equity Capital + Free Reserves + Credit Balance in Profit & Loss Account) minus (Accumulated balance of loss, Deferred Revenue Expenditure and other tangible assets)
b) Net Owned Funds-Owned Funds minus the amount of investment in shares of its subsidiaries, company in the same group
c) Investments can include a share of its subsidiaries, the book value of debentures, bonds, outstanding loans and even advances made to and deposits with its subsidiaries and companies in the same group in excess of 10% of the owned funds.
It can be concluded that the FFMC License is a mandatory requirement. The requirements are laid to regulate and control the activities of money changing. The regulatory body is the Reserve Bank of India. RBI has the authority to appoint any person as the Authorised Dealer under its category. They have also laid the category for franchisees to carry out foreign exchange transactions. The Authorised Dealer has also been given the option to renew the License. It has been declared under the legislation of FEMA that, no entity can perform the business without obtaining the License.
Read our article:RBI Guidelines For FFMC License
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