What is a Full-Fledged Money Changer and How to Obtain Its License?

What is Full Fledged Money changer?

Before we start it is important to understand what Full Fledged Money Changer (FFMC) is. As per Section 10 (1) of the Foreign Exchange Management Act, FFMC is an authorized money changer engaging in foreign exchange or foreign securities dealings.

That is why an entity or individual wishing to start a business concerning activities with FFMC is required to obtain registration of Full-Fledged Money Changer (FFMC) with the Reserve Bank of India, if the entity or individual fails to do so and continue with the business activities without obtaining the registration then such entity or individual will be levied with a penalty.

What are the activities of FFMC?

Any entity or individual undertaking the business dealing with foreign exchange or foreign securities has the following activities to run through: -

• An entity or individual acting as an authoritative FFMC may agree to franchise on their own accord for undertaking the restricted money-changing business which encompasses the activity of converting coins or traveler’s cheques or foreign currency notes into Indian Rupees (INR).
• An FFMC or its Franchise is liberated to unhesitatingly purchase any foreign currency notes or coins or Traveler’s Cheques from both Non-residents Indians and Residents of India.
• An FFMC is allowed to Sell Indian Rupees (INR) to foreign tourists while visiting India against both international debit or credit cards and take necessary actions to acquire reimbursements via normal banking channels.
• FFMC is allowed to choose to make the sale of foreign exchange for the following purposes: -

• Business visits
• Private visits
• Forex pre-paid cards

What is FFMC Registration and what are the Types of licenses required to begin FFMC activities?

The Registration for Full Fledged Money Changer (FFMC) acts as a permit that will allow the entity or individual who is willing to undertake the Forex Currency Exchange or Foreign exchange-related activities.

Thus, to run the business activities as an FFMC, the following are the types of Licenses that are required by the entity or an individual: -

• Authorized Dealer Category-I Banks (AD Category-I Banks)
• Authorized Dealer Category-II Banks (AD Category-II Banks)
• Full Fledged Money Changers (FFMCs)

Eligibility to acquire FFMC License:

The eligibility Criteria that are required to obtain FFMC License: -

• The aspirant must be registered under the Companies Act, 2013.
• For a single branch FFMC the minimum net fund must be 25 Lakhs INR meanwhile for multiple branches it is 50 lakhs INR.
• The entity or individual must not have any pending criminal or civil cases with the Directorate of Revenue Intelligence and the Directorate of Enforcement.
• The memorandum must demonstrate under the object clause that the entity is undertaking money-changing activities

The entity must carry out its business within 6 months from the date of issuance of the license.

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