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Simplifying the RBI Guidelines for FFMC License

FFMC license, the license that you need to become a money changer, entails several guidelines that are too difficult to understand for anyone unfamiliar with the domain. Therefore, just for you, this article is simplifying the RBI guidelines for FFMC license.

FFMC License Guidelines: The basics

What is a money changer?

A money changer is a business entity – a company, a partnership or an LLP – that provides currency exchange services to the clients. Obviously, doing such a business requires knowledge about the foreign exchange market and the regulatory guidelines of the RBI.

Therefore, the Reserve bank of India, under the Foreign Exchange Management Act, 1999, has made it mandatory for any money changer to obtain an FFMC license.

What are the different types of money changer?

There are three types of money changers India:

  1. The Authorized Dealers Category I – Banks
  2. The Authorized Dealers Category II
  3. The Full Fledged Money Changers

What is the purpose behind the existence of money changer?

Authorized Money Changers exist to broaden the scope of foreign exchange facilities for foreign tourists and Indians who wish to travel abroad.

RBI guidelines for issuing the FFMC License

Reserve bank of India have specified eligibility criteria that you need to comply with if you want to obtain the right to file the application for FFMC License:

  1. You must have a company who will act as the applicant for the License.
  2. That company should have a minimum net owned funds of INR 10 Lakh. Consider it an indirect FFMC license fees.

Documents required for the FFMC License

As per the RBI guidelines, the documents required to successfully complete procedure of FFMC license online is as follows:

  1. Certificate of incorporation and certificate of commencement of company
  2. MOA and AOA
  3. Copy of the audited accounts (latest) along with the certificate of the net owned funds
  4. Confidential report obtained from your bank
  5. Copy of audited balance sheet and Profit & loss account.
  6. Declaration that state that no criminal proceedings have been initiated against you.
  7. Declaration that state that the court deem you Fit and proper to run an FFMC.

Conditions for grant of FFMC License

Following are the conditions you must meet to obtain the license to start a Full Fledged Money Changer business:

  1. You must agree with all the conditions mentioned in the license agreement
  2. The directors of your company, including you, must meet the fit and proper criteria
  3. You must get clearance from an empowered committee to obtain the license
  4. You must accept that RBI would have the final say about issuing you the license.
  5. If you live in a region where Shops & Establishment Act is applicable, you need to submit Shops & Establishment certificate to the regional office before commencing your FFMC business.
  6. You have to start your money changing business within 6 months of obtaining the license. And when you do, you need to intimate the RBI about it.

Read More: Legal metrology Consultancy in Delhi

Compliance requirement of an FFMC

After obtaining the FFMC license, you need to adhere to FFMC compliances on a periodical basis.

  1. You have to maintain a registry containing the record of all the business transactions in the format prescribed by the RBI. Furthermore, you must maintain a separate register to act as a balance book of foreign currencies, coins and traveller’s cheques, registry of foreign currency etc.
  2. You must submit the statements of sale and purchase of foreign currency notes to the RBI on a monthly basis.
  3. If your monthly transactions exceed USD 10,000/-. Then you must submit a monthly statement of receipt and purchase of those transactions to the Foreign Exchange Department.
  4. You must file a quarterly statement of the foreign currency account that you maintain in India.
  5. Additionally, you must submit an annual statement to the regional office of Foreign Exchange Department.
  6. Following the proper auditing format is also a must.
  7. Submit the audited balance sheet along with certifications from statutory auditors on a regular basis.

Read More: FEMA Guidelines: Everything that you need to know

Conclusions

These are all the RBI guidelines for an FFMC that you need to keep in mind when running a Full Fledged Money Changing business. For more details, contact Registrationwala.

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