FFMC License

Who are Authorised Money Changers?

Authorised Money Changers

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.

Categories of Money Changers

The firms and organisations, which are typically known as authorised money changers, fall into two categories, namely.

  • Restricted money changers
  • Full-fledged money changers

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.

At the moment, RBI grants authorisation to the following:

  1. Authorised Dealer(AD) Category-I: An organisation that has been granted permission to execute all permitted capital account and current account transactions in accordance with the guidelines that are periodically provided.
  2. Authorised Dealer (AD) Category – II: An entity designated as an authorised dealer (AD) Category-II is permitted to conduct some non-trade related current account transactions, all operations allowed to fully licenced money changers, and any other activity determined by the RBI.
  3. Authorised Dealer (AD) Category – III: An organisation that has been granted permission to conduct specific foreign exchange transactions incidental to its operations is known as an authorised dealer (AD) Category-llI.
  4. Full Fledged Money Changers (FFMC): A money changer authorised to buy and sell foreign currency for specific uses, such as personal and professional travel overseas.
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Who is qualified to do the money-changing business? 

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.

What is the eligibility to obtain FFMC License?

In order to operate as a Full Fledged Money Changer (FFMC), the following requirements must be met:

  • According to the Companies Act of 2013[1], the entity wishing to apply for a Full Fledged Money Changer License must be registered.
  • The entity should have a minimum net-owned fund of 25 Lakhs rupees to apply for a single-branch licence and 50 Lakh rupees for a multiple-branch license.
  • The object clause of the Memorandum should reflect the money-changing activity that the Entity would undertake.
  • With the Department of Revenue Intelligence’s enforcement, there shouldn’t be any active civil or criminal charges involving the company.
  • Once the licence has been received, the entity must start conducting business within six months of the date the forex licence was issued and must inform the Reserve Bank without fail.

Functions of Authorised Money Changers

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:

Foreign exchange trading

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.

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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.

Purchase of Foreign Currency from Public

  • Acquisition of Foreign Currency from Authorized Persons and their franchisees may buy travellers’ checks, foreign currency notes, and foreign coins from both residents and non-residents. The tenderer is required to provide the declaration on form CDF if the foreign currency was brought in that way.
  • Customers who are residents may be asked for cash payments in Indian National Rupees for the purchase of Traveler’s Cheques or foreign currency notes up to a maximum of USD 1000 or its equivalent per transaction.
  • Only requests for cash payments in the amount of USD $3,000 or the equivalent per transaction may be made to international visitors or non-resident Indians.
  • Authorised money changers may exchange Indian rupees for foreign currency using international credit cards or debit cards while taking precautions to ensure they are reimbursed.
  • Payments in Indian Rupees can be made to resident customers at the time of their purchases of foreign currency notes or traveller’s checks in cash, by account payee check, demand draught, loading INR debit cards, or electronic funds transfers through net banking, within the bounds of the established limits.

Encashment Certificate

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.

Purchases made from authorised dealers and other FFMCs

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.

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Sale of foreign exchange

  1. Private Visits
    Throughout a fiscal year, Authorised Persons may sell foreign currency to persons residing in India for use in making one or more private trips to any foreign nation up to the prescribed ceiling set down in Schedule III to the Foreign Currency Management (Current Account Transaction) Rules, 2000. (except Nepal and Bhutan). The traveller will have access to exchange for these private visits on a self-declaration basis on the amount of foreign exchange they used throughout a financial year. Foreign nationals permanently residing in India are also entitled to partake of this quota for private trips provided the applicant is not availing of facilities for remittance of his salary, savings, etc., overseas in terms of extant regulations.
  2. Visits for business
    Up to the limits specified in Schedule III to the FEMA (Current Account Transactions) Rules, 2000, Authorised Persons may sell foreign currency to persons residing in India to engage in business travel, attend a conference or receive specialised training, paying for the maintenance costs of a patient travelling abroad for medical treatment or check-ups, or accompanying as an attendant to a patient travelling abroad for medical treatment or check-ups.
  3. Forex Pre-paid Cards
    Subject to KYC/AML/CFT standards, Authorised Dealers Category-II may provide forex pre-paid cards to residents making personal or business trips overseas. But, AD Category-I banks may handle the settlement for currency pre-paid cards.
    Pre-paid foreign currency cards, which are also known as foreign currency notes or traveller’s checks, are made clear to be a type of foreign currency in this regard. As a result, the authorised dealers (ADs)/FFMCs selling pre-paid foreign currency cards for travel must adhere to the same standards of due diligence and KYC as they would if they were selling their clients foreign currency notes or travellers’ checks.


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: FAQ
Full-Fledged Money Changer (FFMC) license Renewal Process in India
What are RBI Compliances for FFMC (Full Fledged Money Changers) or Persons Dealing in Forex Transaction?

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