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How to Obtain FFMC License in India?

How to Obtain FFMC License in India

It’s important for us to understand what Full Fledged Money Changer (FFMC) entails before we move further with the title. An authorized money changer who engages in foreign exchange or foreign securities is typically referred to as an FFMC License under Section 10 (1) of the Foreign Exchange Management Act. However, in accordance with the Act, anyone or any entity wishing to launch an FFMC business must first register with the RBI. If not, the organization or person will face severe sanctions. As a result, we have thoroughly illustrated the FFMC in this paper. We have also provided instructions on how to obtain the FFMC License in India.  

FFMC in India 

FFMC License registration allows a corporation to engage in the business of foreign exchange trading. The businesses or people designated by the RBI are known as AMC (Authorized Money Changers) under Section 10 (1) of the FEMA Act (Foreign Exchange Management Act), 1999. (Reserve Bank of India). The term Full Fledged Money Changers refers to these AMCs. According to the relevant regulations, no firm is permitted to engage in money-changing activity or promote it unless they have a current FFMC licence that has been issued by the RBI. Therefore, any organization discovered operating such a money-changing business without first receiving approval from the RBI will be liable to the Act’s mandated penalties. 

According to the relevant regulations, no firm is permitted to engage in money-changing activity or promote it unless they have a current FFMC licence that has been issued by the RBI. Therefore, any organisation discovered operating such a money-changing business without first receiving approval from the RBI will be liable to the Act’s mandated penalties. The following activities are required by FFMC License in India-

  • For the purpose of operating the Restricted Money Changing business, which entails converting coins, traveller’s checks, and foreign currency notes into (INR) Indian Rupees, FFMCs may enter into a franchise agreement whenever it is convenient for them. 
  • An FFMC is permitted to buy any coins, traveller’s checks, and foreign currency notes from both NRIs and Indian citizens. FFMCs or their franchisees may also do the same. 
  • Have to exchange INR (Indian Rupees) for international tourists or visitor’s foreign credit cards or foreign debit cards and act quickly to get reimbursed through standard banking channels. 

Eligibility for FFMC License in India 

The following criteria must be met by the applicant in order to be eligible for an FFMC License, per RBI guidelines-

  • The Companies Act of 2013 requires that the applicant have a firm registration. 
  • Additionally, FFMCs with a single branch must have a minimum NOF (Net-owned Fund) of Rs. 25 lakhs, while FFMC License in India with multiple branches must have a minimum NOF (Net-owned Fund) of Rs. 50 lakhs. 
  • The Directorate of Revenue Intelligence and Directorate of Enforcement shouldn’t have any active criminal or civil charges against the organisation or person. 
  • The money-changing activity that the corporation intends to engage in must be clearly stated in the object clause of the memorandum. 

Documents needed to apply for a FFMC License in India 

The RBI must receive the following documentation before you may apply for FFMC License in India- 

  • A duplicate of the company’s certificate of incorporation and certificate of business commencement. 
  • The company’s Memorandum of Association and Articles of Association, or a proper revision with the same effect, must contain the provisions for carrying out money- changing activities. 
  • Multiple copies of the entity or individual’s audited balance sheet and profit and loss account for the three years prior to the date of the license application, if appropriate. 
  • A statement to the effect that no legal action has been taken or is pending against the Directorate of Revenue Intelligence (DRI), Directorate of Enforcement (DoE), or any other law enforcement agency. 
  • A sealed, private report from the applicant’s banker. 
  • A statement stating that suitable policy frameworks for CFT (Combating the Financing of Terrorism), AML (Anti-Money Laundering), and KYC (Know Your Customer) will be in place after obtaining permission from the Reserve Bank of India and before starting company activities. 
  • A certified copy of the board resolution authorising the exchange of currency for FFMC License in India. 

Step-by-Step Instructions for Obtaining RBI FFMC License in India 

Follow the steps given below for obtaining RBI License in India- 

Step 1: Send the application to RBI. In order to register an FFMC, you must first submit a thorough application to the relevant regional office of the RBI. Additionally, you must also attach the previously mentioned documents. 

Step 2: The applicant must meet the qualifications for fitness and propriety. The candidate for an FFMC licence must meet the fit and suitable requirements. It implies that there shouldn’t be any ongoing legal action against the DRI or DoE. The applicant company will not be given consideration for the grant of an FFMC licence while there is a proceeding ongoing. 

Step 3: RBI reviews the Director’s qualification standards. 

The RBI will then assess the director of the applicant company for suitability and appropriateness. The RBI will take the application into consideration if everything is in order and it is satisfied. 

Step 4: The Certificate of Registration is issued  

The RBI will give the licence in two to three months if it is happy with the application and everything is in order. 

Step 5: The Empowered Committee’s approval  

Finally, the application needs the Empowered Committee’s approval. It should be noted that the Reserve Bank of India’s decision or permission is not final and binding. 

The FFMC Post-Approval Requirements 

So, even though you now have an FFMC licence in India, the procedure is far from over. You must abide by the FFMC post-approval criteria. These are what they are- 

  • The regional office of the RBI must receive a copy of the applicant’s Shops stamp; Establishment Act registration or any other documentation serving as proof. A replica of the rental or lease agreement, a rent receipt, etc., may be among them. 
  • Additionally, the submission needs to be made before the start of operations. FFMC License in India that has just been incorporated must promptly carry out their business operations in accordance with the guidelines established by the RBI[1]
  • Every FFMC License in India is required to post a copy of the money-changing licence or FFMC licence issued by the RBI at each location where it conducts business. 
  • FFMCs must maintain the concurrent audit system for the transactions they carry out in the proper location. 
  • Each FFMC License in India is required to deliver its Annual Audited Balance Sheet to the regional office of the relevant RBI. 

Conclusion 

Anyone who wishes to transact in foreign currencies must first obtain an FFMC License in India from the Apex Bank or RBI. The holders of such a license are permitted to buy foreign currency from NRIs (Non-Resident Indians) and sell it to Indian tourists traveling overseas for business. It should be mentioned that only an AMC (Authorised Money Changer) is qualified to deal in the activities related to money changing and foreign exchange, in accordance with the provisions and requirements of Section 10 of the FEMA 1999. The RBI has also granted several businesses and hotels a Full-Fledged Money Changer or FFMC License in India to conduct business with foreign currency, traveller’s checks, and coins. Seek professional advice to obtain FFMC License. You can also reach at Bizadvisors.io.

Read our article:A Complete Guide on Foreign Direct Investment Compliance under FEMA

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