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FFMC License

FFMC is a shortened form for a fully fledged money changer. A company which expects to do the activities of forex currency exchange in the wake of getting the earlier approval of Reserve Bank of India will be viewed as Full Fledged Money Changers (FFMC).

Under Section 10 of the Foreign Exchange Management Act, 1999, the Reserve Bank of India approves entities to bargain in foreign exchange for explicit purposes. These entities are called as Authorized Money Changers (AMCs).

Kinds of Authorized Money Changers

  • Approved Dealer Category - I Banks (AD Category - I Banks)
  • Approved Dealer Category - II (AD Category - II)
  • Full Fledged Money Changers.

The reason for the previously mentioned three sorts of Authorized Money Changers is to empower occupants and tourists to have more extensive admittance to foreign exchange facilities. The goal is likewise to guarantee that clients get the best and the most effective help, with expanded competition.

Full Fledged Money Changer License in India

To fill in as an authorized money changer in India, it is necessary to apply for a recognized fully fledged money changer license which is given by the Reserve Bank of India and if any individual or association viewed as carrying money changing activities without the suitable license, then will be at a risk of getting punished as per the legal provisions. For getting this license in India, it is required that the company is registered under the Companies Act, 2013.

The RBI yearly provides the appropriate guidelines for Fully Fledged Money Changer as an expert circular called the Memorandum of Instruction on Money Changing Activities. Each entity planning to enter or currently associated with the money changing activities in India need to observe these rules just as the provisions referred in the Foreign Exchange Management Act, 1999.

Qualification required for Fully Fledged Money Changer License in India

The qualification models for companies to acquire the Fully Fledged Money Changer license are-

  • The company should get registered with the Registrar of Companies under the Companies Act, 2013.
  • The base net owned fund (NOF) of the company should be INR 25 lakhs for obtaining a license for single branch. In case of multiple licenses, the base net owned fund of the company should be INR 50 lakhs. It is fundamental that the FFMC keeps up with this base NOF on a persistent premise. Aside from this for the fully fledged money changer the prerequisites related sum needed for the specific branch likewise must be fulfilled.
    Single Branch Rs. 25 lakhs
    Numerous Branch Rs. 50 lakhs
    Imp: The Net Owned Fund (NOF) is determined by taking away the investment of the company from the claimed reserves. Investment can incorporate a portion of its auxiliaries, the book worth of debentures, securities, outstanding advances and even advances put aside to and deposits with its auxiliaries and companies in a similar gathering in abundance of 10% of the claimed reserves. Claimed assets, then again, is determined by taking away gathered balance of loss, conceded income expenditure and other tangible assets from the amount of paid-up equity share capital, credit balance and, free reserves in Profit and Loss Account.
  • It is likewise fundamental that the primary movement which is referred in the object clause of the company should be money changing activities.
  • At last, there ought to be no case against the company with the Department of Enforcement or Department of Revenue Intelligence.

Fundamental necessities for Fully Fledged Money License

  • The Fully Fledged Money license should be restored on yearly premise.
  • The company is needed to begin works within a half year from the date of issue of the fully fledged money license.
  • Utilizing a Franchise Agreement, every one of the three classes of AMC- AD Category - I Bank, AD Category - II and FFMC select their franchises to augment the company for giving money changing services, for example, conversion of foreign currency, traveller’s cheque, notes, and coins into Indian money to travellers, NRIs, tourists and so forth
  • To be named as a franchise, the proposed company needs to have a base net owned funds of INR10 lakhs and its primary goal should be money changing activities.
  • The franchisee's books should be yearly reviewed to guarantee that it’s activities agree with laid provisions of RBI.

Primary Regulatory Authority for Fully Fledged Money Changer License

In India, the system for Fully Fledged Money Changer is controlled by the Reserve Bank of India according to Section 10 of the foreign exchange Management Act, 1999. It is compulsory for a license holder to follow the headings and rules given by the RBI. The fully fledged money lender specialist License holder will not take part in any exchange which isn't in similarity with the approval terms. RBI may whenever deny the FFMC license assuming that it is in the public interest.

Review of Documents- Reserve Bank of India is engaged to review the books of accounts and different documents of the fully fledged money changer according to FEMA, 1999. For doing the assessment, full help and co-operation will be given to the researching authority. Notwithstanding, if the entity neglects to deliver books of accounts, or some other documents or neglects to address any inquiry posed by the authority then it will be viewed as a repudiation of the provisions.

Methodology of getting Fully Fledged Money Changer License

One can download the application form for the Fully Fledged Money Changer license from the site of RBI. Alongside the necessary supporting documents, the application form should be submitted to the Foreign Exchange Department of the Reserve Bank of India at the territorial community under the domain of which the registered office of the candidate falls.

  • Above all else, a company must be framed according to the necessities of the Companies Act, 2013.
  • Documentation and Arrangement of the whole essential documents for recording of Fully Fledged Money Changer license application according to RBI rules;
  • Accommodation of FFMC license application alongside the essential documents with the concerned division of RBI;
  • Respond if there should be an occurrence of resubmission;
  • Contact with the RBI until the license is acquired;
  • After the careful review by the RBI, Fully Fledged Money Lender License is acquired.

Documents needed for Fully Fledged Money Changer license

The accompanying documents are needed for fully fledged money changer license:

  • Duplicate of the registration certificate of the company (Certificate of Incorporation and Certificate of Commencement of Business).
  • Duplicate of Memorandum of Association with a letter referencing the statement connected with money evolving movement.
  • Confidential report through the bank.
  • Duplicate of the most recent inspected balance sheet of the company alongside an authentication from the Statutory Auditors of net owned funds. Likewise, examined accounts the most recent 3 years should be submitted.
  • Declaration such that the company or its directors are not being researched by DOE or DRI.
  • Details of the business.
  • Details of a past application for FFMC/RMC license by the candidate
  • A Board Resolution for applying to the Full Fledged Money Changers license and undertaking money changing activity.

Necessities for the Fully Fledged Money Changer License

There are some prerequisites which should be satisfied to get Fully Fledged Money Changer license in India-

  • Application for license will not be thought of if DoE (Directorate of Enforcement)/DRI (Directorate of Revenue Intelligence) had started any Case against the candidate company or its chiefs/promoters;
  • The choice of the Reserve Bank of India will be binding on the candidate company comparable to the approval of the FFMC license;
  • In the wake of getting the Fully Fledged Money Changer license from the Reserve Bank of India, a duplicate of registration under Shop and Establishment, lease receipt or some other narrative proof will be presented by the candidate;
  • When the license is received by the Reserve Bank of India, business ought to be started within a time of six months and such beginning of business will be conveyed to the concerned Regional Office regarding the RBI.

Rules connected with Fully Fledged Money Changer License Renewal

The license holder needs to record a renewal application consistently alongside the pertinent reports with the Reserve Bank of India. The renewal application will be documented somewhere around one month preceding the expiry of the license. When an application is made for FFMC license renewal, it will be valid until the expiry date or dismissal date by and large. Assuming that the license is lapsed, no renewal application can be made.-

Rules with respect to the upkeep of books of accounts by the Fully Fledged Money Changer
For these entities in India, it is needed to keep up with following registers in regard of the money changing activities-

Forms

Explanation

FLM 1

Summary and Balance Book (Foreign money notes/coins) on daily basis

FLM 2

Summary and Balance Book (Travellers’ cheques)

FLM 3

Register foreign currencies purchases from public

FLM 4

Register foreign currencies purchases from authorized dealers and authorized money changers

FLM 5

Register foreign currencies sales and foreign currency travellers’ cheque to the public

FLM 6

Register foreign currencies sales to oversees banks, authorized dealers and authorized money changers

FLM 7

Register of surrender of travellers’ cheque to authorized dealers, and authorized money changers

These documents should be stayed up with the latest, cross-checked and the balances will be confirmed consistently while exchanges which are outside the domain of money changing activities will not be mix together. Separate registers should be kept up with in the event of more than one establishment.
Conditions under which a License can be denied by RBI

The Reserve Bank maintains all authority to deny the license granted to an AMC if it is according to the Reserve Bank of India that:

  • It is out in the public interest to do as such or;
  • The AMC has neglected to consent to any condition subject to which the approval is granted or has negated any of the arrangements of the Foreign Exchange Management Act, 1999 or any standard, guideline, notification, course or request made there under.
  • The Reserve Bank additionally maintains all authority to renounce the approval of any of the workplaces for encroachment of any legal or administrative arrangement.
  • The Reserve Bank may whenever renounce any of the current states of a money changer's license or force new conditions.
Who can get a Franchise License from the current Fully Fledged Money Changer?

To acquire the franchise license from the current FFMC there is a necessity of two things, for example,

  • An entity with the actual business environment and
  • Least Net Owned Funds of 10 lakhs INR;

Assuming the previously mentioned necessities are satisfied, the Franchise agreement will be implemented. Franchisee agreement will depict the tenure which will be chosen by the FFMC and the commission and expenses payable to the franchise as commonly settled between the parties.

Rules connected with Fully Fledged Money Changer License Renewal

The license holder needs to record a renewal application consistently alongside the pertinent reports with the Reserve Bank of India. The renewal application will be documented somewhere around one month preceding the expiry of the license. When an application is made for FFMC license renewal, it will be valid until the expiry date or dismissal date by and large. Assuming that the license is lapsed, no renewal application can be made.-

Entities of the Franchise Agreement
  • The name of the Franchisers and the exchange rates will be fundamentally shown by the Franchisees and the exchange rates will be collaborating with the day to day exchange rates as imposed by FFMC and their branches;
  • The bought foreign currency will be given up by the franchisee to the franchiser within the time of 7 working days from the date of procurement;
  • The appropriate records, of each transaction, will be kept up with by the franchisees;
  • The Franchiser will direct the on-location assessment of the Franchisee to minimum once a year.
How to get a franchise license from the current FFMC?
For getting a franchise license, an application will be made in Form RMC-F joined by an affirmation that adequate due diligence of the entity has been done entering into the Franchise Agreement
How to direct Due Diligence of Franchisees?

While leading the due-diligence of the Franchisees, following things should be thought of:

  • Portrayal of the Franchisee alongside its current business activities;
  • Beware of least Net Owned Funds (NOF) necessities as endorsed;
  • Metropolitan certification including registration under Shop and Establishment act, in the name of Franchisees;
  • Confirmation of the physical office of the Franchisee from where the limited money changing activities will be continued;
  • Approval from the local police experts in the name of the Franchisee to complete the activities;
  • Declaration with respect to non-association in any criminal case;
  • Duplicate of PAN of the Franchisee, its directors, its investors;
  • Passport size photographs of the investors, directors and other KMP related to the franchisee;
  • Individual visit at least one time in a year.
What are the reporting necessities for Fully Fledged Money Changer?
  • Monthly consolidated statements of all workplaces for all trade of foreign currency notes will be put together by the entity in form FLM 8 to the concerned branch of the RBI not later than the tenth of the succeeding month;
  • Monthly explanation demonstrating details of receipt/acquisition of US $ 10,000 (or its same) or more will be submitted to the territorial office of the RBI, within 10 days of the month's end;
  • A quarterly statement in regards to Foreign Currency Account/s kept up with in India in their names with AD Category-I Banks will be submitted to the local office of the RBI;
  • An Annual Statement providing details of the sum discounted during the financial year ought to be put together by all the AMC to the separate Regional Offices of the Foreign Exchange Department, RBI within one month of the ending of financial year.
What are the rules with respect to providing license for setting up an extra branch?
For setting up an extra branch to complete the money changing activity earlier approval of RBI is required. For this reason, a composed application will be submitted to the provincial office of the RBI where the registered office of the company is established. The principal reason for setting up an extra branch is that adequate money exchange offers will be given in the remote areas of vacation destination.
For setting up extra branch following reports are required:
  • Duplicate of most recent evaluated accounts joined by an authentication from Statutory Auditor, obviously determining the place of Net Owned Funds (NOF) as on date;
  • Bankers Report;
  • A declaration determining non-pendency of any procedures with the Directorate of Enforcement (DoE)/Directorate of Revenue Intelligence (DRI) or some other enforcement specialists against the candidate company or its chiefs;
  • Assertion affirming the adequacy of the legitimate policy structure on KYC/AML/CMT;
  • Announcements in regards to internal control frameworks including interior/outer audit;
  • A duplicate of registration under Shop and Establishment, lease receipt or some other narrative proof of the business environment of extra branch.
How to contact Estabizz?
  • Fill the form.
  • Get a call back.
  • Submit the required documents.
  • Track the progress of your application.
  • Get the expected results.

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