What do you mean by Full Fledged Money Changers

(FFMC)?
A company which intends to carry out the activities of forex currency
exchange after obtaining the prior approval of Reserve Bank of India shall
be regarded as Full Fledged Money Changers (FFMC).

Under Section 10 of the Foreign Exchange Management Act, 1999, the

Reserve Bank of India authorizes entities to deal in foreign exchange for
specific purposes. These entities are called as Authorized Money Changers
(AMCs).

There are three different types of AMCs:

 Authorized Dealer Category – I Banks ( AD Category – I Banks)

 Authorized Dealer Category – II (AD Category – II), and
 Full Fledged Money Changers also called as FFMCs.

The purpose of the above mentioned three types of Authorized Money

Changers is to enable residents and tourists to have wider access to
foreign exchange facilities. The objective is also to ensure that customers
get the best and the most efficient service, with increased competition.

What is Full Fledged Money Changers License in India?

In order to work as an authorized money changer in India, one needs to
apply for a valid full fledge money changer license which is issued by the
Reserve Bank of India and if any person or organization found to be
 operating money changing activities without the appropriate license will be
liable to be penalized as per the laws.

For obtaining an FFMC license in India, it is mandatory that the company is

registered under the Companies Act, 2013. 
The RBI annually publishes the applicable guidelines for Full Fledged
Money Changers in the form of a master circular called the Memorandum
of Instruction on Money Changing Activities. Every entity intending to enter
or already involved in the money changing activities in India need to follow
these guidelines as well as the provisions mentioned in the Foreign
Exchange Management Act, 1999.

What is the eligibility criterion for FFMC License in

India?
The eligibility criteria for companies to obtain the FFMC license are:-

 The company has to be registered with the Registrar of Companies

under the Companies Act, 2013.
 The minimum net owned fund (NOF) of the company need to be Rs.
25 lakh for a single branch license. For a multiple branch license, the
minimum net owned fund of the company needs to be Rs. 50 lakh. It is
essential that the FFMC maintains this minimum NOF on a continuous
basis.

Single Branch Rs. 25 lakhs

Multiple Branch Rs. 50 lakhs

Note: The Net Owned Fund (NOF) is calculated by subtracting the

investments of the company from the owned funds. Investments can
include a share of its subsidiaries, the book value of debentures, bonds,
outstanding loans and even advances made to and deposits with its
subsidiaries and companies in the same group in excess of 10% of the
owned funds. Owned funds, on the other hand, is derived by subtracting
accumulated balance of loss, deferred revenue expenditure and other
tangible assets from the sum of paid-up equity share capital, free reserves
and credit balance in P&L Account.

 It is also essential that the main activity which is mentioned in the

object clause of the company needs to be money changing activity.
 Finally, there should be no ongoing case against the company with
the Department of Enforcement or Department of Revenue Intelligence.

What are the basic requirements for FFMC License in

India?
 The FFMC license needs to be renewed on annual basis.
 The company is required to start operations within six months from
the date of issue of the FFMC license.
 Using a Franchise Agreement, all the three categories of AMC:– AD
Category – I Bank, AD Category – II and FFMC appoint their franchises to
widen the network for providing money changing facilities such as
conversion of foreign currency, notes, coins and traveler’s cheque into
Indian currency to travelers, tourists, NRIs etc.
 To be appointed as a franchise, the proposed company needs to
have a minimum net owned fund of Rs. 10 lakh and its main object must be
money changing activity.
 The franchisee’s books need to be annually inspected to ensure that
its activities comply with laid terms and conditions of RBI.

Which authority regulates the framework for FFMC

License in India?
In India, the framework for FFMC License is regulated by the Reserve Bank
of India as per Section 10 of the Foreign exchange Management Act, 1999.
It is mandatory for a license holder to comply with the directions &
guidelines issued by the RBI. FFMC License holder shall not engage in any
transaction which is not in conformity with the authorization terms. RBI may
at any time revoke the FFMC license if it is in the public interest.

 Inspection of Documents
 Reserve Bank of India is empowered to inspect the books of accounts and
other documents of FFMC as per FEMA, 1999. For carrying out the
inspection, full assistance and co-operation shall be provided to the
investigating authority. However, if the FFMC fails to produce books of
accounts, or any other document or fails to answer any question asked by
the authority then it shall be considered a contravention of the provisions.

What is the procedure of obtaining FFMC License from

the RBI?
The application form for the FFMC license needs to be downloaded from
the website of RBI. Along with the required supporting documents, the
application form needs to be submitted to the Foreign Exchange
Department of the Reserve Bank of India at the regional center under the
purview of which the registered office of the applicant falls.

Step by Step procedure for obtaining the FFMC License

 Company Formation as per Companies Act, 2013
 Documentation & Arrangement of the entire necessary documents for
filing of FFMC license application as per RBI guidelines;
 Submission of FFMC license application along with the necessary
documents with the concerned department of RBI;
 Reply in case of resubmission;
 Liaison with the RBI until the FFMC license is obtained;
 After the vigilant inspection by the RBI, FFMC license is granted.

What are the documents required for filing FFMC

License application?
The supporting documents that need to be submitted for obtaining the
FFMC license include:-

 Copy of the certificate of registration of the company (Certificate of

Incorporation and Certificate of Commencement of Business)
 Copy of Memorandum of Association with a letter mentioning the
clause related to money changing activity.
 A confidential report from the bank
 Copy of the latest audited balance sheet of the company along with a
certificate from the Statutory Auditors of net owned funds. Also, audited
accounts for the last 3 years need to be submitted.
 Declaration to the effect that the company or its Directors are not
being investigated by DOE or DRI.
 Details of the nature of the business
 Details of  a previous application for FFMC/RMC license by the
applicant
 A Board Resolution for applying to the Full Fledged Money Changers
license and undertaking money changing activity.