The apex financial institution of the country, the Reserve Bank of India, in matters of foreign trade and exchanges transactions, issues an authorization to the following financial institutions, under the Foreign Exchange Management Act (FEMA) of 1999.
- Banking Systems as Authorised Dealers Category-I: permit current and capital account transactions as per directions issued from time to time.
- Financial institutions as Authorised Dealers Category-II: carry out specified non-trade-related current account transactions and activities permitted to Full Fledged Money Changers and any other activities as decided by the Reserve Bank of India.
- Financial and other institutions as Authorised Dealers Category-III: carry out specific foreign exchange transactions incidental to their business/activities.
- Registered companies as Full-Fledged Money Changers (FFMC) undertake the purchase of foreign exchange and sale of foreign exchange for specified purposes.
Let us try to expand the objective of an FFMC, which is to do business to widen the access of foreign exchange facilities to residents and tourists and ensure efficient customer service through competition.
Eligibility to become an FFMC license holder
To register your business as an FFMC, register your business as an entity authorized by the Reserve Bank under the Foreign Exchange Management Act, 1999. No person shall carry out money-changing business without the required FFMC License issued by the RBI. In case of a violation, the concerned person or business entity will be penalized as per the FEMA act ibid.
Any applicant company who wants to apply for an FFMC license must be a company incorporated under the Companies Act, 1956, Companies Act 2013, or Registration of Companies (Sikkim) Act, 1961. They must have a minimum Net Owned Fund (NOF) of
- INR 25 lakhs to apply for a single-branch FFMC licensed company and
- INR 50 lakh to apply for a multiple-branch FFMC licensed company.
If you want to file an application for your business for an FFMC license, submit the application form, duly filled, along with the required documents to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank of India under whose jurisdiction the registered office of the applicant company falls.
Compute your Net-Owned Funds (NOFs) for FFMC license certification
Also, the applicant company must calculate their Net Owned Funds (NOF) to produce it at the time of registration. You can compute your NOF by using the below-mentioned funds:
- Company-owned funds are paid-up equity capital, free reserves, and credit balance in Profit & Loss accounts minus the accumulated balance of loss, deferred revenue expenditure, and other intangible assets.
- Net-owned funds minus the number of investments in shares of its subsidiaries, companies in the same group, all other NBFCs as also the book value of debentures, bonds, outstanding loans, and advances made to and deposits with its subsidiaries and companies in the same group more than 10 percent of the owned funds.
Apply for an FFMC license online
- Submit your application to the RBI. Submit the license registration application with the required documents at the regional office of the RBI in the format prescribed.
- Fulfill the fit and proper criteria for acquiring an Authorised Money Changer (AMC) license from the apex bank, i.e. the Board of Directors of the applicant company needs to undergo the process of due diligence to confirm that the prescribed Fit and Proper criteria are met.
- Once the license is obtained, the company must commence its business operations within six months and the details of the commencement must be informed to the regional office of the RBI.
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FFMC License renewal
- To apply for the renewal of the expired Full-Fledged Money Changer license, the directors of the company are required to apply for the renewal one month prior to the expiry date of such license.
- If the FFMC registered company is not able to apply for license renewal within the stipulated time frame, the Reserve Bank of India will then reject it whenever filed.
- The previously issued license will remain in existence till the time FFMC company receives the rejection notice. They will not be eligible to furnish the application for license renewal post the expiry of the license.
Revocation / Cancellation of FFMC license
There are various situations prescribed in the guidelines mentioned in the regulations of FFMC companies. The authority to revoke, suspend, or cancel an issued Authorised Money Changer License lies with the Reserve Bank of India. Situations of revocation are mentioned below:
- In the interest and benefit of the general public;
- If an FFMC is unable to comply with the statutory provisions of the FEMA Act of 1999 and the circulars, guidelines, and directions issued by the RBI;
- The Apex bank reserves the right to modify, change, or revoke any of the prevailing terms, conditions, or regulations concerning the FFMC License in India.
Get your FFMC license consultant at Registrationwala
For any assistance regarding the registration of the FFMC license for your company, connect with Registrationwala. Our experts in FFMC licensing processes and FEMA-related issues will guide you through the entire process of certification for procuring the FFMC License for your company. So, Reach out to us at our website and we will begin the licensing process today itself.
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