FFMC License

FFMC License: how to do forex business in India?

If you, as a company or an individual, wants to deal in foreign currency exchanges then you need a legal approval from the Reserve Bank of India to carry out such activities. This license from the apex financial institution is called the Full-Fledged Money Changer (FFMC) License. The FFMC license holder thus have the legal permit to purchase foreign exchanges from non-resident indians or foreigners and then sell them for business and to Indian travelers visiting abroad.

Money exchange and Foreign Exchange services can be only legally provided and conducted by an Authorized Money Changer (AMC), as specified under the FEMA Act, 1999 Section 10. I you are not an AMC dealing in forex business, then you are liable for a penalty. 

Various businesses are in possession on the FFMC license which aides them in conducting their core businesses as well. Like some of the hotel franchises also hold a FFMC license issued by the RBI to cater to the foreign tourists and visitors in need of foreign currency and traveler’s cheques exchanges.

The Reserve Bank of India issues FFMC licenses to those banks which are well equipped to carry out foreign exchange transactions in India. Other financial institutions are also granted FFMC license to undertake foreign exchange transactions that aides them in their main business.

There are three types of Full-Fledged Money Changer (FFMC) License in India:

  • Authorized Dealer Category I – Banks
  • Authorized Dealer Category II (for other non-banking financial institutions)
  • FFMCs

Related Service: Insurance Broker License

Condition for applying for a FFMC License

The criteria for eligibility for applying for Full Fledged Money Changer License in India are as follows:

  • Company applying for FFMC license must possess a CoT (Certificate of Incorporation) under the Companies Act, 2013.
  • For a single-branch company, net owned fund must be minimum INR 25 lacs.
  • For a multiple-branch company, net owned fund must be minimum INR 50 lacs.
  • Memorandum of Association of the registered company must include the clauses for money changing activities.
  • Company must not have any tail with the Department of Revenue Intelligence and Enforcement.
  • It is mandatory for the registered AMC to commence its business activities within the six months of issuance of FFMC license.

The RBI solely dictates the directions and guidelines in the matters of FFMC License as follows:

  • Issue a new AMC license.
  • Renew an AMC license after the validity expires
  • Licenses a branch(es) of the company
  • Deals with KYC Matters
  • Deals with AML (Anti Money Laundering) Matters too
  • Approves for the appointment of Franchisees or Agents
  • Comply with the CFT (Combating of Financing Terrorism) norms
  • Issues guidelines to authorized persons

Documents required for License Registration

The documents required for applying FFMC License are photocopies of the following documents:

  • CoI (Certificate of Incorporation);
  • MoA (Memorandum of Association);
  •  AoA (Articles of Association);
  • Latest Audited Accounts document along with the certificates from the Statutory Auditors confirming the NOF as on the date of application;
  • Latest Audited Balance Sheet;
  • Previous three years Profit and Loss Account;
  • Banks’s Sealed Confidential Report of the company;
  • Details of all the NBFCs associate operating in the financial market;
  • A certified Board Resolution for carrying out the money changing operations.

Related Content: How to increase domain authority

Step-by-Step Procedure

The steps included in the procedure for obtaining Full Fledged Money Changer License from RBI are as follows:

  • Submit the application along with the above-mentioned documents at the regional office of the RBI. Application must be filed as per the Annexure-II format mentioned in the FEMA Act, 1999.
  • The requisite personnel of the company need to fulfil the Fit and Proper Criteria. i.e., This is done to assist the authority in determining the expertise, integrity, qualifications, and previous track record of the person proposed to be appointed as director for the tobe FFMC approved company.
  • The directors of the applicant company then obtain a clearance from the EC Empowered Committee based on proper verification.
  • Now, the apex institution will review the application and submitted documents submitted by the company. If the assessment of the RBI goes in the right direction and the submitted application fits their criteria, then the bank will issue a FFMC License to the company within a time period of two to three months.
  • After the procurement of the license, the company needs to commence its business activities within six months of license issue.

Post Approval Requirement

Even after the FFMC permit is granted to the company, it must fulfill certain put forth by the Reserve Bank of India.

  • A copy of Possession Certificate, Shop and Establishment License, and Lease Agreement should be submitted to the Reserve Bank of India before the commencement of business operations;
  • The applicant company must adhere to all the guidelines, and circulars as issued by the RBI;
  • A proper display of license should be there at every registered office of the license holder company;
  • The company must employ the mechanism of Concurrent Audit for smooth functioning of their forex exchange activities;
  • The company must necessary submit the Annual Audited Balance Sheet and last three years Profit and Loss Account at the RBI’s regional office periodically.

Get your FFMC License at Registrationwala

As described in the above article, you can how detailed and nuanced is the process of registration. Also, when it comes to legal matters, there are several latent points that also needs to be covered when in the registration process. This makes it very tedious and exhausting for the FFMC license applicant companies to acquire for the certification. This is where we, Registrationwala comes to your rescue. We provide you with our legal professionals who pool their resources and expertise on the subject matter to help in procuring the license to FFMC license to conduct  foreign exchange transactons.

Related Content: Telecom Consultant: Provider of Telecom license and Registration

About Stride Post

Check Also

Coinrule Trading Automation: Save Time and Trade Smarter

Trading is a fast-paced business. Accuracy and timing are essential. It can be difficult to …

Leave a Reply

Your email address will not be published. Required fields are marked *