An Overview of FFMC License

Post Approval Requirements for FFMC License

• A copy Shops & Establishment Act Registration Certificate or any other documentary evidence such as Rent Receipt, Lease Agreement etc., must be submitted to the respsective Regional Office of RBI before the commencement of the business.
• New FFMCs must perform their activities as per the instructions given by the RBI from time to time.
• FFMCs should, at each of their business places, show a copy of the Money Changing License issued by the RBI.
• FFMCs must have a system of Concurrent Audits of all the transactions commenced by them.
• All FFMCs must submit their annual audited Balance Sheet to the respective Regional Office of the RBI.

Renewal of FFMC License in India

An Application for the renewal of a Full-Fledged Money-Changers License shall be made before one month from the expiry date of the License. No application for renewal of a Money Changer’s License shall be made after the expiry of the License.

What are the Records and Registers to be maintained by FFMCs?

AMC shall maintain the following Registers in respect of their money-changing transactions:

• Daily Summary and Balance Book of Foreign currency notes/coins in Form FLM 1 and Travellers’ cheques in Form FLM 2.

• Register of purchase of foreign or overseas currencies from the public in Form FLM 3.
• Register of purchase of foreign currency notes or coins from the authorized dealers and money changers in Form FLM 4.
• Register of Sale of foreign currencies & foreign currency travellers’ cheques to the public in Form FLM 5.
• Register of Sale of foreign currencies to the authorized dealers / Full Fledged Money Changers / foreign banks in Form FLM 6.
• Register of Travellers’ cheques surrendered to the certified dealers / money changers / exported in Form FLM 7.

Revocation of FFMC License in India

RBI can revoke or cancel the FFMC License at any time if RBI is satisfied that:

• It’s in the public interest to do so or
• The FFMC has failed to comply with any condition or any of the provisions of the Foreign Exchange Management Act, 1999.

Who are Franchisees?

RBI authorizes one more intermediary to deal in foreign exchange, i.e., Agents and Franchisees.

Authorized Dealer Category- I Banks, Authorized Dealers Category – II and FFMCs can appoint their Agents and Franchisees to deal in money-changing activities. Following are the important points in this regard:

• The AD Category – I Banks,
• AD Category – II Banks and
• FFMCs have been permitted by the Reserve Bank of India to enter into Franchise Agreements at their option for the purpose of carrying on Restricted Money Changing business. Any person proposing to opt for Franchisee of any AMC may do so after entering into the Franchise Agreement.

Following are some important points in this regard:

• A Franchise can be any entity which has a place of business in India.
• An entity should have a minimum Net Owned Fund of Rs.10 lakh.
• Franchisees can undertake only restricted money-changing business.
• A Franchisee Agreement shall be executed between the parties.
• The Franchisees should display the names of their Franchisers, exchange rates and that they are authorized only to purchase foreign currency prominently in their offices.
• The foreign currency purchased by the Franchise should be surrendered only to its Franchiser within 7 working days from the date of purchase. You can also start your currency exchange business in India.
• The maintenance of a proper record of transactions by the Franchise.

Role of Authorized Dealers in Foreign Exchange

Authorized dealers play an important role in Forex transactions. RBI grants authorization in the Form of Licenses to deal in foreign exchanges to the banks which are well equipped to undertake foreign exchange transactions in India. RBI has granted authorization to certain financial institutions to undertake specific types of foreign exchange transactions incidental to their main business.