An Authorized Money Changer is an entity who is authorized by the Reserve Bank of India as per Section 10 of the Foreign Exchange Management Act, 1999.
An Authorized Money Changer is an entity who is authorized by the Reserve Bank of India as per Section 10 of the Foreign Exchange Management Act, 1999.
Authorized money changers (AMCs) are divided into two different categories namely Full Fledged Money Changer (FFMC) and Restricted Money Changer (RMC).
Defining Full Fledged Money Changer (FFMC)
Full Fledged Money Changer (FFMC) is authorized by the Reserve Bank of India (RBI) that is certified to purchase foreign exchange from residents and non-residents of India and sell foreign exchange for business purposes. It falls under the category of Authorized Dealers (AD) of Authorized Money Changers (AMC)
Foreign Exchange Management Act, 1999
The Foreign Exchange Management Act of 1999 is the act of the Parliament of India that’s.
ates “to consolidate and amend the laws related to foreign exchange with the major objective of facilitating external trade and payments and for promoting and boosting the foreign exchange market in India.
Types of Full Fledged Money Changer (FFMC) License
Certain licenses are required to be acquired by an establishment that wants to undertake money changing activities and operate as a FFMC. The licenses required are as mentioned below:
- Authorized Dealer Category – I (AD Category – I Banks)
- Authorized Dealer Category – II (ADs Category – II)
- Full Fledged Money Changer License (FFMC)
Requirements to obtain Full Fledged Money Changer (FFMC) License
- The company must be registered with the Registrar of Companies under the Companies Act, 2013
- The company must possess net owned funds(NOF) of Rs. 25 lakhs for a single branch company, whereas for multiple branch license company, a company must have net owned funds of Rs. 50 lakhs
- The clause that mentions the primary activity must be stated as money changing activity
Documents required to acquire FFMC License
Certain documents are a major requirement to apply for FFMC License. These documents must be arranged and submitted to the Registrar of Companies at the prescribed time.
- Submission of an application form according to the annexure – II as mentioned by the Reserve Bank of India
- Last three years balance sheet as well as profit and loss account of the company that is audited in a proper manner
- Proof of commencement of business
- Incorporation certificate
- Report that specifies important company information
- Statutory auditor certificate of net owned funds
- Verified copy of the Board Resolution
- Memorandum of Association that mentions objects related to money changing activities
- Articles of Association
Application process to acquire FFMC License
It is significant to understand the FFMC License process in order to follow all the steps in an accurate manner, thus eliminating all types of factual errors.
Filing of Application form
The first step in acquiring FFMC License is the application filing. The individual must fill the application in the specified format as mentioned by Foreign Exchange department of the Reserve Bank of India (RBI)
Inspection of Director
In the next step, the assessment of the fit and proper criteria of the director is conducted by RBI. The Board considers all types of factors which includes criminal record, civil actions etc. the declaration form is signed at this step after which an evaluation is conducted to ensure that the information provided in the form is accurate.
Committee Clearance
After all the significant verifications are completed and the authority finds no inaccuracy in the information stated by the applicant, the FFMC License process will be taken further to the next steps in the process.
Final decision by RBI
At this step, RBI carries an inspection and further verifies and declares if the license must be granted to the establishment or not.
Submission of crucial licenses
After the establishment has received FFMC License, it has to submit other licenses too such as lease agreement, papers of property etc.
Commencement of business
The establishment can now start the business and ensure that the business starts to operate within six months from the date of issuance of FFMC License.
Renewal of FFMC License
The FFMC License has an expiry date after which it must be renewed by the entity. It usually expires after a year. The documents with regards to license renewal must be submitted to the authority.
Conclusion
Starting a Full Fledged Money Changer business is expensive and it also takes a lot of time. It requires huge amounts of investments, various licenses. Submission of various documents is also a major requirement to start a Full Fledged Money Changer business. Thus individuals must consider all necessary factors before starting a FFMC License.
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