Overview of FFMC License

FFMC License in India is mandatory for certain entities to deal with foreign exchange or foreign securities. The responsibility to regulate FFMC License lies on the shoulders of Reserve Bank of India.

According to section 10 of the Foreign Exchange Management Act, 1999, authorized money changers are the only type of organizations engaged in money changing services and offer significant foreign exchange services.

FFMC License Holders purchase foreign exchange from Indian residents and non-residents and sell that foreign exchange to foreign visitors or tourists for private and business visits purposes.

Hotels, foreign visitors as well as travelers, along with the specific firms, get the registration to overcome the hindrances and also it will help them in the direction of traveler's cheques, coins, and foreign currency notes as per the RBI guidelines.

Before getting a money changer's license from the RBI end, no person has got the right to proceed or advertise that they deal in money changing activities. If there will be a person's involvement in any form of money changing business without a licit FFMC license in India, that person will amount to heavy penalties as per the Act.

Types of Authorised Money Changers

Here are the following types of AMCs:

Authorized Dealer Category- 1 Banks (AD Category 1)

Authorized Dealer Category- 2 Banks (ADs Category-2)

Full Fledged Money Changers (FFMCs)

What Activities can FFMC Perform?

An authorized FFMC can get into a franchise agreement for carrying out restricted money changing businesses, i.e., conversion of travelers' cheque, coins, or foreign currency notes to Indian currency.

FFMC and their Franchise are entitled with the liberty to buy coins, foreign currency notes, and travelers' cheques from both residents as well as non-residents.

An FFMC has got the green light to sell foreign exchange for Forex prepaid cards, Business visits, and also for Private visits.

An FFMC is authorized to sell Indian currency to tourists from different countries against their International debit/credit cards.

Eligibility Criteria for Applying for the FFMC License in India

The entities applying for the FFMC License in India must be registered under the Companies Act 1956/ Companies Act 2013.

To apply for a single branch, the corporation must have minimum net owned funds of Rs 25 Lakh, and for applying for a multiple branch license, the entity must have Rs 50 Lakh.

The entity's name must not be involved in any civil or criminal case. Department of Revenue Intelligence must not hold any criminal record against the company.

After getting the FFMC License, the entity must continue its business within six months of the date of license issue.

The object clause of Memorandum must have money exchange activity by the company adequately mentioned.