Benefits, Objectives, and Renewal Criteria Of Full-Fledged Money Changer

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Benefits, Objectives, and Renewal Criteria Of Full-Fledged Money Changer

The foreign money-changing business needs a license which is issued by the Reserve Bank of India under Section 10 of the Foreign Exchange Management Act, 1999. To carry on a money-changing business, you must have a valid license. If you are found doing business without a valid license then you will be penalised under the Act.

In the process, the application must be submitted to the Reserve Bank of India (RBI). The eligibility criteria of FMCC are set by the RBI and those who fulfil the criteria can apply for the license. In this article, we share the benefits, objectives and renewal process of existing FMCCs.

Benefits of Foreign Money Changers

A Full-Fledged Money Changer licence in India offers a range of significant benefits, reinforcing its role in facilitating currency exchange and promoting trustworthy financial transactions. Here are the major benefits of FFMC license:

1. Credibility by RBI

The FFMC license is issued by the Reserve Bank of India (RBI) which gives the FFMC businesses a competitive edge in the foreign exchange market. This is because the customers choose authorised FFMCs over unregulated entities. So, exchanging foreign currency from a legal authority is legitimate, credible and backed by the RBI. This advantage enables the FFMC to secure a fair market share and become a reputable player in the market.

2. Foreign Exchange Services

The Foreign Exchange Money Changer can facilitate both the purchase and sale of foreign exchange. It makes foreign exchange convenient and accessible to visitors and residents. Businesses and individuals both can bring in or take out foreign currency.

3. Authorised Money Exchange

The FFMC allows visitors and residents to exchange foreign currency notes, coins, and cheques. Also, it provides the service of exchanging Indian Rupees with international credit or debit cards used by foreign visitors. However, these transactions are seamless through standard banking channels. The currency notes are exchanged at the standard exchange rates that are in alignment with the market.

4. Diversification of Services

Through the FFMC license, businesses can offer other financial products and services beyond the currency exchange. These services can include remittances, prepaid travel services, and other financial-related products. Diversifying the services will not only include the revenue streams but also increase customer satisfaction and loyalty.

5. Certificate of Encashment

The FFMCs that have a valid license can issue a certificate of encashment for the purchase of foreign currency notes, coins and travellers’ cheques. These can be made by the residents and non-residents. However, this certification adds a layer of legitimacy to the transactions.

The license, not only distinguishes the authorised entities from unauthorised ones but also creates a reliable and compliant participation in the foreign exchange market. The credibility of the business creates more customers and contributors to long-term success and growth in the industry.

Objectives of FFMC License in India

The RBI widened the access of foreign exchange facilities to residents and tourists to ensure efficient customer services. The other objectives of the FFMC license are as follows:

1. Access to Foreign Exchange Facilities: Tourists who visit India have a credible option to exchange foreign currency through authorised FFMCs. Also, it makes sure that travellers will get the currency that helps them fulfil their financial transactions in the country.
2. Promotion of Forex Exchange Activities: By providing the FFMC license, the  Indian government is encouraging foreign exchange activities on a large scale.
3. Store Value Card/Charge Card/Smart Card Services: The FFMC license in India helps in the issuance and usage of Store Value Cards, Charge Cards, and Smart Cards for residents travelling abroad. So, these cards provide a secure and efficient way to transact and manage finances while travelling abroad.
4. Facilitation of Cross-Border Transactions: The FFMC contribute to cross-border transactions by offering various services. This not only helps the travellers but also supports international trade and commerce by ensuring the availability of necessary currencies.

In India’s foreign exchange market, the FFMC license plays an important role by promoting accessibility and convenience for both the residents of the country and the visitors. This contributes to the overall growth of forex-related activities in the country.

How to Renew License of Existing FFMCs?

The company must be registered under the Companies Act, of 1956 and have a registered office within the area of jurisdiction of the respective Regional Office of the Foreign Exchange Department. However, the Net Owned Funds required for single brand FFMC is Rs. 25 lakh and for multiple branch FFMC, the NOF must be Rs. 50 lakhs.

The application must be submitted with the following documents, stated below:

• Copy of the latest audited accounts with a certificate from the Statutory Auditors regarding the position of Net Owned Funds.
• Confidential Report from the applicant's banker in a sealed cover.
• A declaration to the effect that no proceedings have been initiated by/ are pending with the Directorate of Enforcement / Directorate of Revenue Intelligence or any other law enforcing authorities against the applicant company or its directors and that no criminal cases are initiated/ pending against the applicant company or its directors.
• A copy of the KYC / AML / CFT policy framework existing in the company.

Note: If you want to renew your license, submit an application one month before the expiry date or within the time period specified by the RBI. Once you apply for the license, it will be valid till the date when it is renewed or rejected. Whichever date comes first, it depends on that. No application for renewal of the FMCC license will be made after the expiry of the license. 

Conclusion

To conclude, the FFMC license has different benefits to have to operate a foreign exchange business. The license gives a competitive advantage to authorised FFMCs over unauthorised currency exchange businesses. Also, the customers prefer the FFMCs that are authorised by the RBI because of security in currency exchange transactions. The FFMCs have diversified financial products and services that promote revenue and loyalty from the customers. 

If you are looking for an FFMC license, then reach out to Registrationwala. We assist you throughout the process from application to final payments and then obtaining a license.

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