Full-Fledged money changers are also known by the name of Authorized Money Changers, which are...
The article describes frequently asked questions on money changing activities. The FEMA has described under section 10 that an authorised bank can act as a money changer or off-shore banking unit or in any other as it may deem fit. This is considered in the FED Master Direction No.3/2015-16. The notification is about the FFMC License also.
FED Master Direction No.3/2015-16.
The FEMA (Foreign Exchange Management Act, 1999), defines the scope of money changing activities which an authorised person or authorised bank is eligible to undertake. RBI has been empowered under Section 10(1) of the Foreign Exchange Management Act, 1999 (FEMA) to:
The Master Circular has clarified over:
The definition of the following are always asked:
Question1. Who are authorised money changers? What are the money changing activities?
Answer 1. An authorised money changer is a fully fledged money changer doing money changing activities, authorised by RBI to deal in foreign exchange for specified activities.
Question2. What are the objectives behind allowing money changing activities?
Answer 2. The objective behind allowing money changing activities is that a fully fledged money changer acts as an authorised entity who purchases the foreign exchange from non-residents and residents of India and sells the same for private and business travel purposes. Under section 10 of FEMA has defined the scope and services of Authorised Dealers who can act as the Money changers and perform money changing activities and offer foreign exchange services.
Question3. Whether License Number is mandatory?
Answer 3. The license is mandatory. No person shall advertise or carry on the money changing activities unless he has not acquired the requisite money changer license issued by the Reserve Bank of India. The person performing money changing activities, without a license is liable to be penalised.
Question4. Who can take the FFMC License?
Answer 4. The applicant has to be a company registered under the Companies Act, 2013. The minimum net owned funds required for consideration as FFMC is 25 Lakhs for a single branch FFMC and Rs 50 Lakhs for Multiple Branch FFMC- Fully fledged Money Changer license.
Question5. Where are the money changing facilities currently available in India?
Answer 5. In the present situation, the conversion of currency notes, coins or traveller’s cheques designated in foreign currency into Indian rupees and vice-versa is possible through AD- Category-I Banks, A.D. Category-II and fully fledged Money Changers (FFMCs). Further, FFMC’S may appoint franchisees or agents to undertake the purchase of foreign currency.
Question 6: Under what circumstances can the Money Changer Activities License can be revoked?
Answer 6. The RBI has the right to revoke the license granted for money changing activities. The revocation of license is possible only when RBI is satisfied that:
The revocation of license is possible when there is a breach of any statutory or regulatory provision. The RBI has the power to vary or revoke any of the existing conditions of a money changer’s license or impose new conditions over it.
Question 7: What do you understand by the Franchisee Agreement?
Answer 7: The Reserve Bank of India permits AD Category –I Banks, ADs Category-II and FFMC to enter into Franchise Agreement at the option for carrying out the restricted money changing business i.e. conversion of foreign currency notes, coins, or traveller’s cheques, into Rupees by the Franchisee. A franchisee is an entity which has the place of business and minimum net owned funds of Rs.10 lakhs. The Franchisee has the option of undertaking restricted money changing business.
It can be concluded that money changing activities by money changers in India, has been adequately covered in the Foreign Exchange Management Act, 1999. The RBI acts as a regulator and controller for the activities of Money changers. Apart from this the FEMA provides rules for undertaking a license, FFMC license, to pursue and continue the activities of money changing in India.
Read our article:All you need to know about Money Changing Activities