FFMC License

FFMC Licence Requirements in India

FFMC Licence

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.

Different types of FFMC Licence

There are 3 types of licences that are issued for the business of money exchange:

  • Authorised Dealers Category -I Banks (AD Category–I Banks);
  • Authorised Dealers Category-II (ADs Category–II) and;
  • Full-Fledged Money Changers (FFMCs).

 FFMC Licence Requirements

The following requirements for applying for FFMC Licence are listed below:

  • Any entity or business registered under the provisions of the Companies Act 2013[1] is permitted to apply for a Full-Fledged Money Changer Licence in India;
  • The object clause of the Memorandum and Article of Association must contain provisions that reflect the money changing business activity of the company;
  • The minimum Net owned Funds required for a Single Branch FFMC is Rs. 25 lakh, and for Multiple branch FFMC is Rs.50 lakh;
  • The minimum required Net Owned Funds shall be maintained all the time;
  • A copy of latest audited accounts along with Certificate for position of the Net Owned Funds from the Statutory Auditors must be submitted on the date of application;
  • No civil/criminal case pending before the Department of Enforcement or Department of Revenue Intelligence (Economic Frauds);
  •  A declaration is submitted to the effect that proper policy framework on KYC / AML / CFT as per the guidelines issued by RBI;
  • ‘Fit and proper’ criteria has to be fulfilled by the applicant of FFMC Licence (also applicable to non-bank ADs Category – II);
  • FFMC can carry out the money changing business at any additional place other than its permanent place of business only after the prior approval of RBI;
  • A franchisee can be any entity having a minimum Net Owned Funds of Rs.10 lakh and can undertake only restricted money changing business;
  • It is necessary to renew the FFMC licence each year by giving the application documents to the Reserve Bank of India;
  • Forex Licence holder shall commence business operations within six months from the date of licence issuance and inform RBI of the same.
READ  Money Changing Activities: FAQ

Procedure Required for Full Fledged Money Changer Licence

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:

  • He/ she must not be a MLA (Member of the Legislative Assembly);
  • He/ she should not be a Member of Parliament;
  • The age of the proposed individual shall not be more than 70 years;
  • No history of indulgence in  Fraudulent Practices;
  • Should not have any criminal antecedent;
  • Clearance shall be obtained from Empowered Committee Clearance.

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.

READ  All you need to know about Money Changing Activities

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.

Benefits of FFMC Licence

  • An FFMC Licence Holder has the Capability to provide sale facilities and foreign exchange services;
  • FFMC licence holder can offer encashment certificates in case of the Travellers Cheques, Foreign Currency Notes from the Non Residents and Residents;
  • An FFMC Licence Holder can undertake foreign exchange activities for the foreign tourists visiting India;
  • An FFMC Licence holder is eligible to sell foreign currency for Private Visits, Business Visits, and Forex Prepaid Card;
  • An FFMC Licence Holder deals in coins, travellers’ cheques, and foreign currency at the current foreign exchange rate.


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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