What Does It Mean By Full Fledged Money Changer?
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:
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.
Documents Required To Be FFMC
Procedure to be registered as FFMC:
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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.