A few years ago, the Reserve bank of India decided to take away the FFMC license of over 150 money changers in South India. To the onlookers, that decision came out of nowhere. One minute people were just doing their business – providing foreign exchange services to the customers and the next, they were forced to send away high paying prospects – potentially to never see them again. Why did it happen?
To this day, people don’t know for certain. However, when you look deeper into this issue, you’d notice that even the smallest mistake can piss off the RBI, enough to take your license away.
So, how can you prevent the same fate as those FFMCs? The answer lies in the points below.
Read the FFMC license terms carefully
When you apply for FFMC license online, merely the government fees shouldn’t be your only concern, you should also be aware of the terms and conditions. Reserve Bank of India has the responsibility to deal with even tiniest matters concerned with economics. And when you’re doing a money changing business – providing foreign exchange services to clients who are foreigners and Indians alike – RBI’s responsibility increased exponentially, and so does the strictness of its rules. That’s why, reading the terms and conditions of the FFMC license policy is something you absolutely cannot ignore.
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If you have trouble understanding those terms and conditions, consult with an FFMC license consultant. in addition to being consultants, they are also lawyers. Thus, they can help un-complicate the legal jargon of those rules – presenting them to you in a simple manner.
Don’t do any business other than changing currencies
One of the reasons money changers often lose their licenses is because they try to do a lot more than what the FFMC license allows them to. As an FFMC, you’re allowed to do the following:
- Issuing encashment certificates
- Providing money exchange services
- Providing foreign exchange to forex prepaid cards
- Issuing traveller’s cheques.
However, there have been some incidences where an FFMC license holder tries to go beyond the scope of the RBI license. He or she tries to participate in activities that include anything from providing loans to selling foreign insurance services. Not only conducting such activities is a fraudulent act, but it also directly contravenes the FEMA (Foreign Exchange Management Act) rules set by the Reserve bank of India.
Don’t work on an expired FFMC license
The FFMC license fees, at least the professional part of it, can be quite steep. That often creates a misconception that the license would exist with you forever. It doesn’t. Your license expires after five years. Once expired, the only way you can revive your business is through FFMC license renewal. To renew your license, you need to stay vigilant and file the renewal application 2 months before your license expires.
Conclusion
Imagine the terror in the eyes of those FFMC licensees when they received notification that they can’t continue doing business anymore. You don’t want the same to happen to you, especially if you’ve become a money changer for a long run. You still have time. If your license is about to expire, renew it. If you have not understood the terms and conditions, ask our consultants to help you. And if you’re doing a business that goes beyond the scope of your FFMC license, STOP.
If you want to hold your FFMC license for a long time, then prevent making these mistakes. If you have any questions, consult with our experts. Our wpc certificate consultants are waiting.
