Introduction
Many people wish to launch their own forex trading company for a number of reasons. These companyes are “Full Fledged Money Changers,” which means they are registered with the RBI and hold an FFMC licence or registration. An FFMC, an RBI-approved organisation, facilitates the purchase of foreign currency from Indian nationals and the sale of it to those travelling abroad for company or pleasure. In this post, we will examine the process of obtaining a new FFMC licence in India.
Activities Performed by Authorised Money Changers
As per the Foreign Exchange Management Act of 1999, authorised money changers are necessary for the delivery of currency exchange services. Below is an overview of these:
1. Currency Conversion Services
AMCs offer currency exchange services to both residents and non-residents. This involves utilising the current exchange rates to convert one currency into another. Residents may require foreign currency for legitimate purposes, such as company travel or international travel, whereas non-residents may use Indian currency while visiting India.
2. Providing foreign visitors with Indian cash for purchase
They accept Indian currency as payment for international debit and credit cards, making it simple for foreign visitors to obtain the local currency they want for their transactions in India. This service improves the entire travel experience for company and international tourists.
3. Extending the reach through franchise agreements
Authorised money changers can expand the services they provide by entering into franchise agreements with other companyes. Through these collaborations, AMCs can broaden their operations, which may include:
- Coin conversion: Under franchising agreements, AMCs may provide services for changing foreign coins into local currency or vice versa. This service might be useful for travellers who want to turn their foreign coins into cash.
- This involves buying and selling commodities, financial products, or foreign currencies in the foreign exchange market. This trend may lead to an increase in AMCs’ revenue and service offerings.
Read blog: Full Fledged Money Changer
Requirements to Obtain a New FFMC License
1. Registration of the organization:
A company that wishes to convert money is required by the Companies Act to register with the Registrar of Companies. This registration is necessary to establish the legal body’s existence and structure.
2. The main function of the MOA:
In the Memorandum of Association, currency exchange must be explicitly stated as the primary company of the organisation. This ensures that the company’s primary goal aligns with its expected revenue-generating activities.
3. Clear Legal History:
The company should not be connected to any criminal charges or legal disputes with the Department of Revenue Intelligence or the Department of Enforcement. Maintaining an impeccable legal record demonstrates that the company abides by financial regulations.
4. The Net Owned Fund Requirements:
There are certain net owned fund criteria that vary depending on whether the applicant plans to run one branch or several branches:
- A minimum net owned fund of Rs 25 lakhs for a single branch is required of the application.
- A net owned fund of at least Rs 50 lakhs is required of the aspirant for multiple outlets. When the FFMC corporation creates additional sites, this higher requirement is necessary.
5. Timely Commencement of company:
After receiving the FFMC license, the applicant has six months to start currency exchange-related company operations.
Documents Needed for a New FFMC License Application
1. The Incorporation and Commencement Certificate:
Present documentation confirming the company’s formal formation and the commencement of operations.
2. Historical Three-Year Audit Reports:
Give the audit reports for the profit and loss accounts and balance sheet for the preceding three years.
3. Memorandum of Association (MOA) and Articles of Association (AOA):
Submit the AOA and MOA that list money-changing operations as the company’s primary activity.
4. RBI-based application form (Annexure-II):
The RBI-based Application Form (Annexure-II), which contains details on money-changing transactions, should be completed and submitted.
5. The Authorization Certificate for Statutory Auditors:
The Statutory Auditors’ certificate confirming the authorisation of owned funds ought to be included.
6. A copy of the ruling made by the board:
Provide a copy of the board resolution attesting to the company’s involvement in money-changing activities.
7. The Bank Confidential Report:
A candidate’s private bank report should be provided.
8. Proclamation on Anti-Money Laundering and the Acquisition of Customer Data:
Within the policy framework, make a declaration about the collection of customer data and compliance with anti-money laundering regulations.
How does one apply for a new FFMC licence in India?
The procedures for obtaining a new FFMC licence in India are as follows:
Step 1: Sending in an application
In order to receive a new FFMC licence, you must first visit the RBI website, download the application, and attach the necessary documents listed in the section above. Forward the application to the relevant regional RBI office.
Step 2: Validating Fit and Proper Standards
In order to get a new FFMC licence, the RBI must next extensively check the firm’s director using the “Fit & Proper Criteria.” The scrutiny panel of the RBI will assess the Director’s suitability to manage foreign exchange operations. L
Step 3: Candidates are assessed by the Empowered Committee
After reviewing the applicant’s supporting documentation, a committee with the necessary power will decide whether to approve the application. In India, this is step three of the application procedure for a new FFMC licence.
Step 4: Approval by RBI
In the fourth stage of acquiring a new FFMC license, the RBI may permit the applicant to carry out foreign exchange transactions following a successful review.
Step 5: Additional Licenses Must Be Submitted
As part of the fifth step in the process of getting a new FFMC license, the applicant must submit additional documents to the relevant authorities, such as a lease agreement, shop and establishment permission, or property papers, prior to starting company activities.
Step 6: Establishment of a company
The company has to open for company within six months of the licence being granted. The applicant must notify the authorities before establishing a company. The country’s application process for a new FFMC licence is now complete.
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