An FFMC License is granted to business entities 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. For FFMC License Renewal, a company has to make an application to the Reserve Bank of India (RBI) one month prior to the license expiry date. In this article, we will discuss the FFMC license renewal.
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) issues 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 travellers, and visitors, along with specific firms, acquire registration to prevail over the obstructions, and also registration helps them in foreign currency notes, coins, and traveller'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 Banks (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, travellers' cheque.
A Full Fledged Money Changer and its franchise are at liberty to buy foreign currency notes, coins, and travellers' 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 is the procedure for Obtaining FFMC License?
What are the rules for FFMC License Renewal?
Full Fledged Money Changer license holder has to file an application for FFMC license renewal along with the necessary documents to the Reserve Bank of India. The Full Fledged Money Changer license holder has to file the renewal application one month prior to the license expiry date. After the application is made for FFMC license renewal, it will be valid until the rejection date or expiry date, whatever the case may be. If the renewal application is made after the FFMC license expiry, the application is of no use, and no restoration can occur.
What are the Annual Compliance Requirements for Full Fledged Money Changer?
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.
FFMC License Renewal Process
The applicant must be a company registered as per the provisions of the Companies Act, 2013 of Companies Act, 1956. The applicant company should have a registered office within the area of jurisdiction of the concerned regional office of the Foreign Exchange Department.
The applicant company needs a minimum Net Owned Fund (NOF) for different categories. For the license renewal of single branch FFMC, the minimum Net Owned Fund required is INR 25 lakh and for a multiple branch FFMC, the minimum Net Owned Fund required is INR 50 lakh.
The application for FFMC license renewal must be submitted with the necessary documents. The following are the documents required for license renewal:
One certified copy of the latest audited accounts along with a certificate issued by the Statutory Auditors about the situation of Net Owned Funds as on date.
A confidential report issued by the banker of the applicant. The confidential report must be in a sealed cover.
The applicant identity has to provide a declaration stating that no proceedings are pending or initiated by the Directorate of Revenue Intelligence or Directorate of Enforcement or any other concerned law enforcing authorities against the directors of the applicant company or against the company and that no cases are pending or initiated against the directors of the company or company itself.
A certified copy of KYC, AML, or CFT policy framework existing in the applicant company.
Conclusion
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) issues the Full Fledged Money Changer (FFMC) License. The Full Fledged Money Changer license holder has to file the renewal application one month prior to the license expiry date. After the application is made for FFMC license renewal, it will be valid until the rejection date or expiry date, whatever the case may be. If the renewal application is made after the FFMC license expiry, the application is of no use, and no restoration can occur.
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