An FFMC License is granted to organizations that procure foreign exchange from Indian residents and non-residents and sell them to individuals visiting abroad for private and business purposes. Under the provisions of section 10 of the Foreign Exchange Management Act (FEMA) of 1999, states that organizations who have obtained Full Fledged Money Changer (FFMC) License can offer essential foreign exchange services and deal in money changing actions.
What is the FFMC License?
In India, an FFMC license is mandatory for the organizations that are involved in foreign securities and foreign exchange. The Reserve Bank of India (RBI) regulates the Full Fledged Money Changer (FFMC) License. Under the provisions of Section 10 of the Foreign Exchange Management Act (FEMA) of 1999, states that organizations that have obtained Full Fledged Money Changer (FFMC) License can offer essential foreign exchange services and deal in money changing actions.
Hotels, Foreign travelers, and visitors, along with specific firms, acquire registration to prevail over the obstructions, and also registration helps them in foreign currency notes, coins, and traveler's cheques as per the guidelines of the Reserve Bank of India. Before the attainment of Full Fledged Money Changer's license from the Reserve Bank of India, no person or entity has the authority to advance and advertise that they deal in changing activities. If any person or entity is involved money changing activities or business without a legitimate FFMC license in India, that person or entity has to face heavy penalties as per the provisions of the principal Act.
What are the different types of Money Changers?
For any entity to operate, the following types of licenses can be acquired-
Authorized Dealer Category- 1 Bank (AD Category-1)
Authorized Dealer Category- 2 Banks (AD category-2)
Full Fledged Money Changers (FFMCs)
What are the activities performed by FFMCs?
An authorized Full Fledged Money Changer can come into a franchise agreement for commencing restricted money changing businesses such as the conversion of foreign currency notes to Indian currency or conversion of coins, travelers' cheque.
A Full Fledged Money Changer and its franchise are at liberty to buy foreign currency notes, coins, and travelers' cheque from both non-residents and residents.
A Full Fledged Money Changer has permission to trade foreign exchange for Business visits, Forex prepaid cards, and also for private visits.
A Full Fledged Money Changer is authorized to trade Indian currency to tourists visiting India against their International credit or debit cards.
What are the eligibility guidelines for obtaining FFMC Registration?
According to RBI guidelines, the applicant must meet the following requirements-
The applicant should have a company registered under the Companies Act, 2013.
The minimum Net-owned Fund is necessary for a single branch; it should be Rs. Twenty-five lakhs while it should be Rs. Fifty lakhs with multiple offices.
There should not be any criminal or civil cases pending against the company.
The object clause of the Memorandum of association must reveal the money-changing activity is to be pursued by the company.
The entity carries out the business within six months after acquiring the license.
What are the documents required for obtaining FFMC License?
The following documents are required:
A copy of the Incorporation certificate of the entity
The Memorandum of association and Memorandum of an article comprising a provision for carrying money exchange business.
Copy of the latest audited accounts, Balance Sheet, and Profit & Loss Account of the company for the last three years
Sealed and covered confidential reports from applicant Banker.
A declaration providing information related that no criminal cases are initiated or pending against the applicant entity and the directors.
Provide all the details concerning the sister or associated entities dealing in the financial sector, such as NBFC.
A certified Board Resolution consists of the information of money exchange-related business.
What is the procedure for Obtaining FFMC License?
Apply for FFMC license
Submit your detailed application for the FFMC to the RBI's concerned regional office along with the required documents.
Fit and Proper ‘criteria
The applicant should fulfill a fit and proper criterion, which means there should not be any pending proceedings.
Review of Application by RBI
The RBI will review the application for fit and proper criteria for the applicant company director. If the RBI finds the form fit, the application will be considered.
Certification for Registration
If RBI is satisfied with the application and everything is fine, the RBI will grant the license within two or three months.
Clearance by Empowered Committee
The applicant requires approval from the empowered committee set up for the purpose.
What are the Annual Compliance Requirements for FFMC?
The Annual Compliance Requirements for FFMC are as follows-
FFMC is to maintain a balance book of foreign currency, register for daily summary and a proof of the purchase of foreign currency, etc.
FFMC is to give the purchase of foreign currency notes to the RBI within the 10th of the next month
FFMC is to submit an annual statement to the respective Regional Offices of the Reserve Bank of India.
FFMC is to submit the certificate issued from the statutory auditors along with an annual audited balance sheet regarding the NOF to the respective Regional Office of the Reserve Bank.
Conclusion
It is necessary to obtain an FFMC license if anyone wishes to carry India's money exchange business. The FFMC registered by the Reserve Bank of India deals with foreign exchange for explicit purposes, such as the purchase of foreign exchange from the residents and non-residents visiting India. And you need to follow the requirements and compliances after obtaining the FFMC license online in India. Under the provisions of section 10 of the Foreign Exchange Management Act (FEMA) of 1999, states that organizations who have obtained Full Fledged Money Changer (FFMC) License can offer essential foreign exchange services and deal in money changing actions.