What are the Forex Trading License Requirements

Preface: This post was originally published in 2022 and has been updated on May 02, 2025, to provide you with the most current and accurate information.

Forex trading license, also known as FFMC license, is an authorization by RBI to approve an individual or business entity to conduct trading in forex. This article details the requirements for the issuance of a new Forex trading license.

What is Forex Trading in India?

Forex trading means the process through which individuals, businesses and central banks exchange one currency for another one. A large portion of currency conversion is done in order to make a profit, while some foreign exchange is done for practical purposes. Some currencies might have extremely volatile price swings due to the daily volume of money exchanged. For traders, this volatility is what makes forex appealing to traders. 

For conducting forex trading, it is important to obtain the forex license from the Central Bank. To obtain this license, you must file an application with the concerned regional office of RBI.

Forex Trading License Requirements

Every Full Fledged Money Changer is authorized to purchase foreign exchange from non-residents visiting India as well as residents. The Forex Trading License holder can sell foreign exchange for both private and business travel.

Entry Norms of a Forex Trading License holder

The RBI Money Changer applicant has to be a company registered under the Companies Act of 2013 or the Registration of Companies (Sikkim) Act of 1961.

Net Owned Fund: Requirement and Calculations

We have detailed the minimum Net Owned Funds requirement for FFMC registration consideration in the following points:

• For Single branch FFMC, the minimum net owned fund requirement is Rs. 25 lakh
• For Multiple branch FFMC, the minimum net owned fund requirement is Rs. 50 lakh

The Net Owned Funds of FFMC applicants, other than traditional banks, must be calculated as per the following:

Gross Owned Funds 

The Gross Owned Funds in an FFMC setup comprise the following:

• Paid-up Equity Capital
• Free reserves
• Credit balance in Profit & Loss A/c

But for yielding out the NOF, the following must be subtracted from the Gross funds:

• Accumulated Loss Balance
• Deferred Revenue Expenditure
• Other Intangible Assets

Net Owned Funds 

The applicant must calculate the NOF by subtracting the Gross Owned Funds from the following:

• Amount of investments in shares of its subsidiaries
• Amount of investments in companies in the same group,
• Other Non-Banking Financial Companies
• Book value of debentures, bonds, outstanding loans, and advances made to its subsidiaries more than 10 percent of the Gross Owned Funds

Required Documentation for the Forex Trading License 

The applicant must submit the application in the prescribed form. The applicant must address the application to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank. It is under this jurisdiction the registered office of the applicant falls. Attach the following documents with the application:

1. Incorporation Certificate

Submit a copy of the Certificate of Incorporation of the Applicant Company

2. Memorandum and Articles of Association

They must contain the provision for undertaking money exchanging business. They must also detail an appropriate amendment to the effect filed with the Company’s Board.

3. Audit Statements

Applicant must also submit a copy of the latest audited accounts. A certificate must accompany this from the Statutory Auditors certifying the Net Owned Funds. Submit copies of the Audited Balance Sheet as well as the Profit & Loss Account of the applicant company for the last three years. The applicant must also submit a confidential report from the applicant's banker in a sealed bank cover.

4.Declaration of Compliance from Authorities

The FFMC applicant must also submit a declaration that no proceedings have been initiated by the following against the applicant company or its directors:

• Directorate of Enforcement
• Directorate of Revenue Intelligence
• Other law enforcing authorities

The Declaration must also mention that no criminal cases are initiated against the applicant company or its directors.

How to get a Forex License in India?

To get a forex license in India, the applicant needs to fulfill the following steps:

• You must submit a complete and detailed application for forex license to the RBI’s regional office. Along with the application, make sure you file all the relevant documents.

• Once RBI receives the application, the applicant entity’s director would be examined as per fit and proper criteria of RBI. 

• If RBI is satisfied, it’ll issue the applicant entity a forex license.

Conclusion

If you want to trade in forex, you must get an FFMC License from the RBI. Connect with Registrationwala for assistance in getting this license. We’ll help you collect all the necessary documents and file the application form, on your behalf, with RBI.

Frequently Asked Questions (FAQs)

Q1. Who issues the forex trading license in India?

A. The Reserve Bank of India (RBI) issues the forex trading license in India.

Q2. Is trading in forex permitted in India?

A. Yes, trading in forex is permitted in India. However, it has certain limitations and restrictions.

Q3. How can I get a forex trading license in India?

A. You can get a forex trading license in India by filing an application with the RBI. If your application meets all the requirements, you will receive the license.

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Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.