FFMC License Online – An Overview

The Full-Fledged Money Changer (FFMC) License facilitates transactions in foreign currencies. Applicants who wish to apply for an FFMC license online must obtain a permit from the Reserve Bank of India (RBI). FFMC license holders are legally permitted to buy foreign currency from Non-Resident Indians (NRIs) and sell it to Indian tourists traveling overseas for business.

However, only an Authorized Money Changer (AMC) can conduct transactions related to money changing and foreign exchange as per the provisions and requirements of Section 10 of FEMA 1999.

The RBI has also granted some businesses and hotels a Full-Fledged Money Changer License to conduct business with foreign currency, traveler’s checks, and coins. This ensures a seamless experience for international visitors and tourists.

Confused about the pathway for FFMC license registration online? Let Fastzeal's experts assist you with a smooth and effortless registration process.

What is FFMC?

A Full-Fledged Money Changer (FFMC) is a company with a valid license from the Reserve Bank of India (RBI) to engage in currency exchange and related activities. FFMC license consultants assist in acquiring, managing, and renewing the FFMC license. They also ensure compliance with RBI regulations to facilitate smooth operations and license renewal.

Types of Full-Fledged Money Changer License in India

Different types of Full-Fledged Money Changer licenses in India include:

Authorized Dealer Category I

Category I authorized dealers are eligible to handle current and capital account transactions. The RBI provides regular guidelines to manage these transactions, which include nationalized, lending non-nationalized, and foreign banks.

Authorized Dealer Category II

Category II authorized dealers can deal in specific trade-related current account transactions or FFMC-specific activities as determined by the RBI. Cooperative and rural banks are some of the entities mandated to obtain a Forex License in India.

Authorized Dealer Category III

Category III authorized dealers are eligible to engage in foreign exchange transactions, primarily related to remittance services, travel-related foreign exchange services, and retail foreign exchange services.

Full-Fledged Money Changer (FFMC)

Full-Fledged Money Changers (FFMCs), including the Department of Post and urban cooperative banks, are authorized to buy and sell foreign exchange for designated purposes.

Benefits of FFMC License Registration Online

Some key benefits of obtaining an FFMC license include:

1.      Authorized Money Changers (AMC) with a valid FFMC license can provide services related to buying and selling foreign currencies.

2.      FFMC license holders can issue encashment certificates for traveler’s checks and foreign currency notes from residents and non-residents.

3.      FFMC license holders can conduct foreign exchange transactions for international visitors to India.

4.      Authorized Money Changers (AMC) with an FFMC license from RBI can handle transactions involving coins, traveler’s cheques, and foreign currencies at the prevailing exchange rate.

5.      FFMC license holders can offer money-changing services to both Indian residents and non-residents.

6.      The FFMC license enables companies to support cross-border international trade and commerce transactions.

7.      Full-Fledged Money Changer license holders are qualified to provide FEMA compliance services for tourists under the FEMA Act, 1999.

8.      The FFMC license facilitates issuing store value, charge, and smart cards for Indian residents traveling abroad.

Eligibility to Apply for FFMC License Online in India

Applicants must fulfill the following conditions to apply for an FFMC license online in India:

·         The business entity must be a company incorporated under the Companies Act of 1956 or 2013.

·         The minimum Net Owned Funds (NOF) requirement is:

·         INR 25 lakhs for a single branch

·         INR 50 lakhs for multiple branches

·         The applicants must not have any pending legal cases, disputes, or involvement with the Department of Revenue Intelligence or Enforcement.

·         The Memorandum of Association (MoA) must include a clause legitimizing money-changing business activities.

·         Operations must commence within six months after obtaining the FFMC license from RBI.

Regulatory Framework for Full-Fledged Money Changer License

Entities authorized by the RBI under Section 10 of the Foreign Exchange Management Act, 1999, are considered Authorized Money Changers (AMCs). The RBI issues standards and guidelines for:

1.      Issuing new FFMC/AMC licenses

2.      Renewal of AMC licenses

3.      Branch licensing

4.      Anti-Money Laundering (AML) compliance

5.      Franchisee or agent approvals

6.      Know Your Customer (KYC) guidelines

7.      Authorized person norms

8.      Combating Financing of Terrorism (CFT) regulations

Required Documents for FFMC License Application

To apply for an FFMC license, applicants must submit the following documents to the RBI’s regional Foreign Exchange Department:

1.      Certificate of Incorporation (COI)

2.      Memorandum of Association (MoA) including a money-changing business clause

3.      Articles of Association (AoA)

4.      Confidentiality Report from the Bank

5.      Latest audited Financial Statements

6.      Statutory Auditors' Certifications for NOF

7.      Latest audited Balance Sheet

8.      Profit and Loss Account for the last three years

9.      Details of related or sibling companies such as NBFCs

10.   Board Resolution approving the operation of a money-changing business

Procedure to Obtain FFMC License from RBI

The procedure to apply for an FFMC license from RBI includes the following steps:

"Fit and Proper" Criteria - Applicants must meet the "Fit and Proper" criteria to obtain the Authorised Money Changer License from the Reserve Bank of India. The Board of Directors must ensure a thorough due diligence process to fulfill this essential criterion.

Paperwork Preparation - To obtain the Full-Fledged Money Changer (FFMC) license, applicants must compile all necessary documents in compliance with RBI guidelines.

Application Submission to the RBI - The applicant must draft and submit an application in the prescribed format to RBI’s regional Foreign Exchange Department office.

Application Review - The RBI reviews the submitted application and verifies the supporting documents. If the application does not meet the mandatory requirements, applicants may resubmit it.

Background Verification - The RBI conducts a comprehensive background verification to ensure the financial stability of applicants seeking an FFMC registration, ensuring a secure process for all involved.

License Certificate - Once RBI completes its evaluation and is satisfied with the findings, it grants the FFMC License. The applicant must commence operations within six months of receiving the license.

Renewal of FFMC License

Validity of FFMC License

The FFMC license remains valid for three years.

Applicants must initiate the renewal process one month before the expiration date.

Once the renewal application is filed, the license remains valid until its expiration or rejection.

Documents Required for Renewal:

Copy of the latest audited accounts.

Certificate from statutory auditors confirming the Net Owned Funds.

Sealed Confidentiality Report from the bank.

Statement confirming no legal action or pending proceedings against the applicant company or its directors.

The renewal application must be submitted before the license expires, as per RBI regulations.

Penalty for Non-Compliance

The RBI has the authority to impose penalties or revoke the FFMC license if compliance requirements are not met. Some reasons for revocation include:

Violating RBI’s statutory or regulatory provisions.

Conduct against the public interest.

Breaching the provisions of the FEMA Act 1999.

Assistance for FFMC License Holders

Post-Approval Compliance Requirements:

·         Submit copies of the Possession Certificate, Shop and Establishment License, and Lease Agreement to RBI before starting operations.

·         Begin FFMC business within six months of receiving the license and notify RBI.

·         Display a copy of the obtained FFMC license at all registered office locations.

·         Adhere to RBI's guidelines, directions, and circulars.

·         Maintain and submit annual audited balance sheets and financial statements to RBI.

·         Keep records like Form FLM 1-7 for daily transactions involving foreign currency and traveller’s cheques.

·         Implement an audit system and appoint an auditor for compliance with RBI regulations.

·         RBI reserves the right to inspect books and records of FFMCs as per FEMA Act 1999.

Franchise Owners' Concept

Agents or franchisees are intermediaries authorized by RBI to engage in foreign exchange activities. Authorised Dealer Category-I Banks, Authorised Dealer Category-II Banks, and Full-Fledged Money Changers (FFMCs) can appoint agents or franchisees for money-changing activities.

Key Considerations for Franchise Appointment:

·         Any company in India can qualify as a franchise or agent.

·         The minimum Net Owned Funds (NOF) requirement is INR 10 lakhs.

·         Franchisees can engage only in restricted money-changing activities.

·         A franchise agreement must be signed by all parties.

·         Franchisees must display the names of their franchisers, current exchange rates, and foreign currency purchase permissions.

·         Foreign currency acquired by a franchise must be returned to its franchiser within seven business days.

·         Accurate transaction records must be maintained by each franchisee.

Revocation of FFMC License

The RBI has the authority to revoke, suspend, or cancel an FFMC license if an entity fails to comply with:

FEMA Act 1999 provisions.

RBI guidelines, circulars, and regulations.

Any modification, alteration, or repeal of terms and conditions by RBI.