What does it mean by Full Fledged Money Changer?
- Incorporate your Company as per the Eligibility Norms
- Drafting of Application
- Filing of application with RBI for Money Changer License
- Liasoning with RBI and responding to RBI call letters if any
- RBI Approval for License
The companies that after obtaining a licence from the Reserve Bank of India ( RBI) intents to carry out functions of forex currency or money changer activity is termed as ‘Full Fledged Money Changer’.
Only entities other than Banks can be termed as Full Fledged Money Changer and are categorized under the Authorised Dealer Category II whereas the Banks are categorized as the Authorised Dealer Category I.
Every full fledged money changer is required to follow circular on Memorandum of Instruction on Money Changing Activities published by RBI and also provisions of Foreign Exchange Management Act, 1999 is to be followed by every FFMC licence holder.
Eligibility criteria by a company to be FFMCs:
The company should be registered under the Companies Act, 2013.
The Minimum Net Owned Funds ( NOF) are as follows:
- Single Branch FFMC- 25 lakhs
- Multiple Branch FFMC- 50 lakhs
Associated Terms:
Owned Funds:
It is calculated as accumulated balance of loss, deferred revenue expenditure and other intangible assets subtracted from paid up capital, free reserves, credit balance in P&L account.
Net Owned Funds:
If we subtract all the investments, Loans and advances given or deposits made with: subsidiaries or group companies in excess of 10% of the owned companies from the owned funds, we get net owned funds.
- Certificate of Registration (Copy)
- Memorandum of Association (Copy)
- Letter having a clause which gives details for the providers for taking up money changer’s business
- Report from the Applicant’s Bank ( CIR format)
- Latest Audited Balance Sheet ( Copy)
- Certificate from the Statutory Auditors enclosing their Net Owned Funds
- A declaration that no proceeding against the company or any of the directors have been initiated by the
- Department of Enforcement or Department of Revenue Intelligence
- Undertaking to post competent staff who can handle the money changer’s activities
Procedure to be registered as FFMC:
- Incorporate itself under Companies Act 2013.
- Get the application ready with the complete set of annexures as per RBI specification.
- Submit application to the RBI regional office along with the required documents.
- Reply with all the re-submissions, if required.
- Liaisons with the RBI upto the stage of Receipt of License.
- Granting of license after vigilant inspection of the application and the documents attached.
Currently conversion of foreign currency to indian currency and vice-e-versa is possible through:
- AD Category-I Banks
- AD Category-II
- Full Fledged Money Changers
Further , each one of them may appoint franchises(known as Agents) for undertaking purchase of foreign currency.
AMC’s are entities under section 10 of the Foreign Exchange Management Act, 1999 authorised by the RBI to deal in foreign exchanges for the specified purposes.
Yes, license is mandatory for every person issued by the RBI to carry on the money changing business. Any person found to carry out the business without a proper license is liable to be penalised.
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