FFMC License Full Fledge Money Changers

Money Changing Activities: FAQ

Faqs on Money Changing Activities

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:

  1. Banks which are as Authorised Dealers Category-I to carry out all permissible current and capital account transactions as per the directions issued from time to time.
  2. The  entities which act as Authorised Dealers Category-II to carry out specified non-trade related current account transactions which are all the activities permitted to Full Fledged Money changers and any other activity as has been decided by the Reserve Banks
  3. The Financial and other Institutions which are under Authorised Dealers Category-III to carry out specific foreign exchange transactions incidental to their business/activities.
  4. Registered companies as full fledged money changers to purchase and sell foreign exchange for the specified purpose only.

What are the other directions for Money Changing Activities?

The Master Circular has clarified over:

  1. The Directions relating to money changing activities includes;- authorisation, and functioning of FFMCs (fully fledged Money Changer License), Non-Banks ADs Category II, and franchisees of Authorised Persons
  2. It includes different types of foreign exchange transactions with their customers. This has been passed through the Master Direction, u/s 10(4) and Sec 11(1) of the FEMA.
  3. The Circular clarifies that the directions are for the Authorised Dealers that Money Changing Activities are without prejudice to permissions or approvals, as required under the law.
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Definitions of Related Terms under Money changing Activities/FFMC

The definition of the following are always asked:

  1. Authorised Persons means an authorised dealer, off-shore banking unit or any other person authorised under section 10(1) to deal with foreign exchange securities.
  2. Authorised Dealers– the person who has been authorised in the FEMA, under section 10(1).
  3.  Authorised Dealer Category –I mean entities authorised by the Reserve Bank of India, to perform capital and current account transactions.
  4. Authorised Dealer Category- II it carries non-trade related current account transactions. All the activities are allowed by Fully Fledged Money Changers and any other activity decided by RBI. It shall include- FFMCs, selected regional rural bank, selected urban cooperative banks.
  5. Authorised Dealer Category III- means entities, which are authorised by the RBI to carry out foreign exchange transactions incidental to their business/activities.
  6.  Full Fledged Money Changer-FFMC– A money changer has been authorised to purchase foreign exchange from non-residents who are visiting India and residents, and to sell foreign exchange for private and for business travel purposes.

Frequently Asked Questions on Money Changing Activities

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.

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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:

  • Mandatory for the public interest to do so or
  • The Money Changer has failed to comply with the conditions, subject to which authorisation is granted or
  • Has contravened the provisions of FEMA as rules, regulations, notifications or bye-laws.

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.

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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

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