RBI Regulations for Money Changing...
Full-Fledged money changers are also known by the name of Authorized Money Changers, which are...
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The agencies involved in the currency conversion business are known as Full Fledged Money Changers (FFMC License). According to Section 10 of the Foreign Exchange Management Act, 1999, a company can undertake money-changing activities only after the grant of the FFMC Licence renewal. FFMC licence holders are permitted to provide necessary foreign exchange (forex) services.
An application from an FFMC Licence renewal shall be made two months before expiry of the licence or such other period as the prescribed by the Reserve Bank of India. Where an application for licence renewal is submitted, the licence shall continue in force until the date on which the licence gets renewed or the application is rejected. An application from an FFMC Licence renewal shall not be made after expiry of the licence.
There are 3 types of licences that are issued for the business of money exchange:
The following requirements for applying for Licence Renewal for existing FFMCs are listed below:
|Category||Min. Net Owned Funds|
|Single branch FFMC||Rs. 25 lakhs|
|Multiple branch FFMC||Rs. 50 lakhs|
It is necessary for all FFMCs to submit their annual audited balance sheet to the respective Regional office of the Reserve Bank of India for verification of their Net Owned Funds along with the latest audited accounts with a certificate from the Statutory Auditors regarding the status of Net Owned Funds as on date of the Balance Sheet.
FFMCs are mandated to maintain the minimum Net Owned Fund at any given time; if failure to maintain the minimum level of Net Owned Fund is reported. Then FFMC licence Holder is required to bring it to the notice of the Reserve Bank of India immediately, along with a detailed time-bound plan for restoring the Net Owned Funds to the minimum required level.
The FFMC company forms a Constituting Nomination Committee to initiate a process of due diligence to ascertain the suitability of the person for an appointment or holding the appointment as a director on the Board, by accessing the qualification, years of experience, performance record, integrity and other relevant ‘fit and proper’ criteria. The applicant should not exceed the age of 70 years(relaxation will be granted in some instances), and should not be a sitting Member of Parliament /Member of Legislative Assembly of States/ Member of Legislative Council of States.
A declaration must be submitted to the effect that no proceedings have been initiated or pending before the Directorate of Enforcement / Directorate of Revenue Intelligence or any other law enforcing authorities against the applicant company or its directors.
The FFMC Licence renewal process is similar to applying for the FFMC licence for the first time. FFMC Licence must be renewed annually by submitting the renewal application form with relevant documents to the Reserve Bank of India. RBI has also issued regular directions for registration of FFMC Licence and renewal. FFMC Licence holders must adhere to the AML compliance for Combating Financing of Terrorism (CFT) and Money Laundering. The business organisation should comply with the obligation made by RBI, even after holding the FFMC license to avoid legal penalties.
Read our Article: FFMC Licence Requirements in India