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RBI Guidelines Issue FFMC License

Narendra Kumar

| Updated: Sep 27, 2017 | Category: Full Fledge Money Changers, RBI Registration

RBI Guidelines Issue FFMC License

FFMC License is mandatory for all types of currency exchange business in India.

Guidelines for FFMC Licence

Authorized Money Changers (AMC) are the entities duly authorized by the Reserve Bank under Section 10 of the Foreign Exchange Management Act, 1999.

What is Authorised Money Changers (AMC)?

AMC is a Full Fledged Money Changer (FFMC). There are three types of AMC which is Authorised Dealer Category -I Banks, Authorised Dealers Category – II and Full Fledged Money Changers (FFMCs). The main objective to add one more AMC is to widen the access to foreign exchange facilities to residents and tourists and ensure efficient customer service through competition.

Any person who wants to start a money exchange business shall hold a valid license issued by the Reserve Bank. Any person without holding a valid license carries a business will amount to heavy penalties.

What are the Guidelines for an issue of FFMC License?

Conditions to be fulfilled while applying for an FFMC license:

  1. Applicant should be a company registered under the Companies Act, 1956.
  2. The net owned fund of the Company should be as follows:● Single branch FFMC: Minimum 25 Lakh

    ● Multiple branch FFMC: Minimum 50 Lakh

In the above case, the net owned funds is equal to Owned fund minus a number of investments in shares of its subsidiaries, companies in the same group, all (other) non-banking financial companies as also the book value of debentures, bonds, outstanding loans and advances made to and deposits with its subsidiaries and companies in the same group in excess of 10 percent of the Owned funds.

Wherein owned fund is equal to paid-up capital plus free reserve plus credit balance in P&L A/c minus accumulated a balance of loss.

Application for License

The applicant shall file an application:

The application shall be filed in the form for FFMC license under section 10(1) of FEMA, 1999.

Documents Required

  • Copy of Certificate of Incorporation and Certificate of Commencement of the Company.
  • Memorandum of Association and Articles of Association of the company. Same should contain a provision for undertaking money changing business.
  • Copy of the latest audited accounts along with a certificate of certifying the Net Owned Funds as on the date of application from the Statutory Auditors.
  • Copies of the audited Balance Sheet and Profit & Loss Account of the company for the last three years.
  • Applicant Banker’s confidential report.
  • A declaration to give an effect that no proceedings have been initiated by / are pending with the any Authority.
  • A declaration to the effect that proper policy framework on KYC in accordance with the guidelines will be put in place on obtaining the approval of the Reserve Bank and before the commencement of operations.
  • A certified copy of the board resolution for undertaking money changing business.

Grant of FFMC License

On satisfaction of below criteria and application the full fledge money changer license in India can be issued:

  • An applicant shall comply with all the license requirement.
  • The applicant and Directors should confirm the Fit and proper criteria mentioned by the Reserve Bank.
  • The application shall get clearance from the Empowered Committee, set up for the purpose.
  • The decision of the Reserve Bank on the license would be final.
  • After issuance of Licence a copy of the registration under Shops & Establishment Act or any other documentary evidence such as rent receipt, a copy of lease agreement, etc. shall submit to the Regional Office before the commencement of the business.
  • The FFMC shall commence its operation within a period of Six Month from the date of issue of license. The FFMC shall also intimate about the same to Regional Office concerned of the Reserve Bank.

Additional Branches of FFMC

The FFMC can have more than one business operation at different locations after obtaining approval for each branch.

Franchisee by FFMC

Reserve Bank of India has permitted FFMC to enter into franchise agreement which may refer to an agency agreement to carry on Restricted Money Changing business i.e. conversion of foreign currency notes, coins or travelers’ cheques into Indian Rupees.

The condition for franchisee:

  • The entity should have a place of Business.
  • The entity should have minimum Net Owned Funds of 10 lakh.
  • Franchisee can only undergo restricted money changing business.

Franchise Agreement shall contain the following features:

  • The name of Franchisers, exchange rates and authorized to purchase foreign currency at their office should be displayed.
  • Exchange rate for conversion of foreign currency into Rupees should be the same or close to the daily exchange rate charged by the FFMC.
  • The franchisee shall surrender to the franchiser all foreign currency purchased by the franchisee within 7 working days from the date of purchase.
  • Franchisee shall maintain proper record of transactions.
  • The on-site inspection of the franchise by the franchiser shall be conducted at least once a year.

Procedure for Application

  • The FFMC shall file an application in form RMC-F for an appointment of franchisees to the respective Regional Office of the Reserve Bank.
  • The application shall contain the declaration stating that due diligence has been carried out and the entity has undertaken all the compliance required to enter into franchisee.
  • The Reserve Bank shall give approval for a first franchise agreement.

Annual Compliance requirement for FFMC

  • The FFMC shall maintain shall maintain the registered under the form prescribed by the Authority. Daily summary and Balance book of foreign currencies coins and traveler’s cheque, register of purchase of foreign currency etc. shall be maintained.
  • The FFMC shall submit monthly consolidated statements of a sale or purchase of foreign currency notes shall be submitted to Reserve Bank within 10th of next month.
  • The Full Fledged Money Changer shall submit a monthly statement of receipt and purchase of US $ 10,000 and above transactions to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank within 10th of next month.
  • The FFMC shall submit a quarterly statement of Foreign Currency Account/s maintained in India.
  • The FFMC shall submit an annual statement to the respective Regional Offices of the Foreign Exchange Department, Reserve Bank.
  • There should be a proper system of Concurrent Audit of the transactions undertaken by them.
  • FFMC shall submit annual audited balance sheet along with the certificate from the statutory auditors regarding the NOF as on the date of the balance sheet to the respective Regional Office of the Reserve Bank.
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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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