All you need to know about Full Fledged Money Changers License

Full-Fledged Money Changer is an authorized entity that may purchase foreign exchange from non-residents of India and sell the same for private and business travel purposes only to people visiting Abroad. A Full Fledged Money Changers License is a permit given by a competent authority to carry on foreign exchange activities in India and also to the branches, offices, and agencies outside India or controlled by a person resident in India. According to Section 10 (1) of the Foreign Exchange Money Act, 1999, any entity that is willing to engage in foreign exchange or foreign exchange securities must make an application to the Reserve Bank of India to be certified as an Authorized Dealer.

Introduction

Authorized Money Changers/ AMCs are entities that are authorized by the Reserve Bank of India as per Section 10 of the Foreign Exchange Management Act of 1999. Accordingly, an AMC may either be a Restricted Money Changer (RMC) or a Full-Fledged Money Changers License (FFMC). As defined by the Act, an Authorized Person essentially means an authorized dealer, money changer, off-shore banking unit, or any other individual for the time being authorized under sub-section (1) of Section 10 to involve in foreign securities or foreign exchange. A license is required by Full Fledged Money Changers License to purchase foreign exchange from residents and non-residents visiting India and to sell foreign exchange for specifically approved purposes.

Full Fledged Money Changers License

FFMC is an authorized entity that may purchase foreign exchange from the NRIs providing them with Indian Currency and may sell the foreign additional exchange for travel purposes, whether private or business but only to the people visiting from abroad. For this purpose, they need an approved license from RBI.

Types of FFMC license

• Authorized Dealer Category-I Banks (AD Category-I Banks)
• Authorized Dealers Category-II (ADs Category–II)
• Full Fledged Money Changers (FFMCs)

Eligibility to obtain FFMC license

• The Entity that wishes to apply for a Full-Fledged Money Changer License must be registered under the Companies Act, 2013.
• The Entity must have a minimum net-owned fund of INR 25 Lakhs in order to apply for a single-branch license and INR 50 Lakhs for a multiple-branch license.
• The object clause of the Memorandum of Association must mention the activity of money changing that is to be undertaken by the said entity.
• There must not be civil or criminal cases pending against the Entity with the enforcement of the Department of Revenue Intelligence.
• After obtaining the FFMC License, the Entity must carry out its business activity within 6 months from the date of issuance of the Forex License and intimate the RBI, without failure.

Documents Required for FFMC License

The following are the documents required for FFMC License:

• A copy of the Certificate of Incorporation of the Entity.
• The Memorandum and Articles of Association comprise of a provision for undertaking money-changing businesses or an appropriate amendment with the same effect.
• A copy of the latest audited accounts of the Entity with a certificate from Statutory Auditors certifying the Net-Owned Funds as of the Date of Application for the License.
• Several copies of the audited Balance Sheet and, Profit and Loss Account of the Entity for the immediate three years prior to the Date of Application for the License, wherever applicable.
• A Confidential Report from the banker of the Applicant in a sealed manner.
• Information concerning the sister or associated concerns operating in the financial sector such as NBFCs.
• A certified copy of the Board Resolution to undertake a money-changing business.

Process of Obtaining FFMC License

The process of obtaining an FFMC License is concerned with the Reserve Bank of India. A complete and detailed application for the FFMC License is submitted to the concerned regional office of the Reserve Bank of India. The Director of the applicant Entity would be reviewed under the “fit and proper” criteria by the RBI. If everything is in line with the satisfaction of the RBI, then the Full-Fledged Money Changer (FFMC) License would be issued within a period of 2 to 3 months. Clearance by the Empowered Committee is a necessity and the Reserve Bank’s decision on the subject of granting approval or not would be final and binding.

Post Approval Requirements by FFMC’s

The following are the post-approval requirements by FFMC:

• A copy of the registration under the Shops and Establishment Act or any other documentary evidence such as a rent receipt or a copy of the lease agreement must be submitted to the Regional Office directed by the Reserve Bank before the commencement of any business activity.
• New Full Fledged Money Changers (FFMC) must carry out their activities according to the instructions specified by the Reserve Bank often.
• FFMCs must, at each of its business places, display a copy of the money-changing license issued by the RBI.
• FFMCs must have a system of Concurrent Audits of all the transactions undertaken by them.
• It is essential that all FFMCs submit their annual audited balance sheets to the respective Regional Office of the RBI.

Records and Registers by FFMC

The following are the Records and Registers by FFMC:

• Daily Summary and Balance book of the foreign currency notes/ coins in form FLM-1.
• Daily Summary and Balance book of Traveller’s cheques in form FLM-2.
• Register of purchases of foreign currencies from the public in Form FLM-3.
• The Register of purchases of the foreign currency notes/ coins from authorized dealers and authorized money changers in Form FLM-4.
• Register of sales of foreign currency notes/ coins and foreign currency traveler’s cheques to the public in Form FLM-5.
• The Register of sales of the foreign currency notes/ coins to authorized dealers/ Full Fledged Money Changers/ overseas banks in the Form FLM-6.
• Register of traveler’s cheques surrendered to the authorized dealers/ authorized money changers/ exported in the Form FLM-7.

Renewal of FFMC License

An application for the renewal of a Full-Fledged Money Changer (FFMC) License must be made 1 month from the expiry date of the license. No request for the restoration of a money changer’s license shall be accepted after the expiry of the FFMC license.

Conclusion

A full-fledged Money changer license is a permit given by a competent authority to carry on foreign exchange activities in India and also to the branches, offices, and agencies outside India or controlled by a person resident in India. According to Section 10 (1) of the Foreign Exchange Money Act, 1999 any entity that is willing to engage in foreign exchange or foreign exchange securities must make an application to the Reserve Bank of India to be certified as an Authorized Dealer.