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FFMC Licences are granted to ensure the access to foreign exchange facilities for residents and tourists visiting India while maintaining efficient customer service through competition. Full Fledged Money Changer Licence holders can purchase foreign exchange from residents and non- residents of India and sell that forex for private and business travel purposes only to those visiting abroad.
Money changing business can be undertaken by entities authorised by the Reserve Bank of India under Section 10 of the Foreign Exchange Management Act, 1999. The RBI is the sole authority to issue a valid licence for undertaking money changing business. The Reserve Bank of India also permits FFMCs to enter into agency or franchisee agreements at their option to start a restricted money changing business, i.e. conversion of foreign currency notes, coins or travellers’ cheques into Indian Rupees.
There are 3 types of licences that are issued for the business of money exchange:
The following requirements for applying for FFMC Licence are listed below:
The following steps included in the procedure for obtaining FFMC Licence from RBI are:
STEP 1- An applicant company submits an application and the required documents to the Reserve Bank Of India in the prescribed format.
STEP 2- For acquiring an FFMC Licence from the Reserve Bank of India, a company must fulfil a Fit and Proper Criteria. Consequently, the company’s Board of Directors needs to undergo the process of Due Diligence to ascertain prescribed Fit and Proper criteria are duly met.
The most significant function of the Fit and Proper Criteria is to assist in determining the expertise, integrity, qualifications, and previous performance history of the person proposed to be appointed as Director.
Essential requirements of the Fit and Proper Criteria are motioned in the list below:
STEP 3- The directors of Applicant Company are required to obtain a clearance certificate from the Empowered Committee (EC).
STEP 4- The RBI will review the application and documents submitted by the company. If the RBI is satisfied that the FFMC Licence application and documents furnished successfully fulfil the fit and proper criteria, then it will issue a FFMC Licence to the applicant within a period of 2 to 3 months.
STEP 5- After obtaining a FFMC licence, the business entity must commence its commercial operations within 6 months, beginning from the date of the licence issuance.
The RBI has made very stringent measures for the businesses that deal in exchange of currencies, which facilitates the tourist most. RBI has also issued directions to grant registration to some hotels and firms to deal in foreign currency notes to mitigate the difficulties foreign tourists and visitors face. The authorities like ED and RBI are vigilant and keeps a check on the business activities of money exchange, as this facility can generate the problem of money laundering. All FFMC Licence holders must adhere to the AML compliance for Combating Financing of Terrorism (CFT) and Money Laundering.
Read our Article: RBI Guidelines For FFMC License
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