Direct Tax Services
Select Your Location
Authorised money changers are one of the most prominent actors in the foreign exchange industry in India. According to Section 10 of the Foreign Exchange Management Act of 1999, authorised money changers (AMCs) are organisations that have received authorisation from the Reserve Bank of India. As a result, an AMC can either be a Full Fledged Money Changer (FFMC) or a Restricted Money Changer (RMC) (FFMC).
According to the Act, an Authorised Person is essentially any person who is currently permitted under sub-section (1) of Section 10 to engage in the trading of foreign securities or foreign exchange, including an Authorised Dealer, Money Changer, Offshore Banking Unit, or any other person. FFMCs need a licence in order to buy foreign currency from Indian residents and international visitors, as well as to sell currency for explicitly authorised uses.
The Reserve Bank has granted licences to certain established firms, hotels, and other organisations, allowing them to deal in foreign currency notes, coins, and travellers’ checks subject to directions issued to them from time to time in order to provide facilities for the encashment of foreign currency to visitors from abroad, especially foreign tourists.
Table of Contents
The firms and organisations, which are typically known as authorised money changers, fall into two categories, namely.
Restricted money changers, who are only permitted to buy foreign currency notes, coins, and traveller’s checks on the condition that each collection is turned over to a licenced foreign exchange dealer or full-fledged money changer in turn.
Full-fledged money changers who are permitted to conduct both buy-sell transactions with the general public. Approved money changers (AMCs) and Full- Fledged Money Changers (FFMCs) are businesses that want to perform forex currency or money changer activities after getting a licence from the Reserve Bank of India (RBI).
Every fully licenced money changer is required to abide by the RBI’s Memorandum of Instruction on Money Changing Activities circular, and holders of FFMC licences must additionally abide by the terms of the Foreign Exchange Management Act, 1999.
Under Section 10 of the Foreign Exchange Management Act, 1999, entities authorised by the Reserve Bank of India may engage in the business of exchanging money. No one is allowed to operate a money exchange business unless they have a current licence from the RBI. The Act imposes penalties on anyone found operating a money-changing business without a proper licence.
In order to operate as a Full Fledged Money Changer (FFMC), the following requirements must be met:
According to the amended FED Master Direction, Authorised Money Changers must conduct their business in conformity with Sections V and VI of the Master Directions. The specifics of how money changers operate and must carry out their duties are outlined in Section 5. Let’s examine what authorised money changers in India are doing:
If it is declared on the Currency Declaration Form (CDF) to the Customs Authorities upon arrival, foreign currency may be brought into India in any form without limitations or restrictions. The government does not mandate that such disclosure be made to the CDF when the amount of foreign currency brought is less than USD 10,000 or is equal in currency notes or travellers’ checks or when the value of foreign currency notes is up to USD 5,000 or its equivalent.
No one is allowed to withdraw any kind of foreign currency unless they get it from a licenced dealer or money changer. The restriction is waived when the Reserve Bank grants general or specific permission. Non-residents of India are automatically granted permission to withdraw funds up to the amount they entered the country with.
Encashment Certificate In India, authorised money changers are also permitted to provide a certificate of encashment in exchange for accepting travellers’ checks, foreign currency notes, and coins from both residents and non-residents. These certificates must be issued on the money changer’s letterhead and bear the authorised signatures. Also, appropriate records must be kept for the same.
Customers must be made aware that non-residents’ unspent local currency can only be converted into foreign currency in exchange for the presentation of a valid encashment certificate when the encashment certificate is not issued.
Any foreign currency notes, coins, and cashed traveller’s checks may be purchased from other Full-Fledged Money Changers and Authorised Dealers by a Non-Bank AD Category II. Only crossed-account payee checks, demand drafts, banker’s checks, pay orders, or electronic funds transfers through banks may be used to pay for the equivalent amount in Indian National Rupees that was purchased in foreign currency.
Without a valid licence from the RBI, no one is permitted to run a money exchange business. Anyone found operating a money-changing business without the appropriate licence faces penalties under the Act. A Full Fledged Money Changer (FFMC) License renewal request must be submitted one month before the license’s expiration date. After the FFMC licence expires, no request for the reinstatement of a money changer’s licence will be accepted.
Also Read:Money Changing Activities: FAQFull-Fledged Money Changer (FFMC) license Renewal Process in IndiaWhat are RBI Compliances for FFMC (Full Fledged Money Changers) or Persons Dealing in Forex Transaction?
I am a driven and meticulous professional who completed B.Com BL (Hons) from Tamil Nadu Dr. Ambedkar Law University and completed Master of Laws in specialization (Criminal Law with Cyber Crimes). I have extensive experience in Criminal Litigation and want to utilise my legal knowledge in writing also I have proficiency in writing legitimate content with comprehensive research. My core areas of interest are Business Law, Intellectual Property Rights, and Cyber crimes.
The Reserve Bank of India, in its press release dated June 8, 2023, issued Statement on Develop...
RBI released a developmental and regulatory policy statement on June 8, 2023. The objective of...
Financial Institutions called Asset Reconstruction Companies ("ARCs") reconstruct and securitis...
Any person booked for an offence under the Criminal Procedure Code (CrPc) / the Code would be r...
The Reserve Bank of India regulates Non-Banking Financial Companies in India, and they are subj...
The Reserve Bank of India regulates Non-banking Financial Companies in accordance with the RBI...
Incorporation of a Limited Liability Company (LLC) is an attractive choice for small business o...
The Reserve Bank of India (the Bank) issued Non-Banking Financial Companies Acceptance of Publi...
A few years ago, investing in traditional investment categories like shares, bonds, real estate...
Compared to other organisations, the corporate governance of Non-Banking Financial Companies is...
Are you human?: 6 + 4 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
The article provides a guideline for Regulatory Framework of FFMC License. The FFMC license is all about the Fully...
09 Feb, 2021
Full-Fledged money changers are also known by the name of Authorized Money Changers, which are the entities authori...
15 Oct, 2018
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!