Fully-Fledged Money Changer (FFMC) License: A Comprehensive Guide

A Fully-Fledged Money Changer (FFMC) is an entity authorized to purchase foreign exchange from both residents and non-residents of India. This license allows the entity to sell foreign exchange strictly for private and business travel purposes to individuals traveling abroad.

 

Why Register for an FFMC License?

Any business or individual involved in foreign currency exchange must obtain an FFMC license from the Reserve Bank of India (RBI). Without this license, engaging in money-changing activities is illegal and can result in penalties under the law.

The FFMC license is essential for entities involved in foreign exchange activities, ensuring compliance with RBI regulations. A registered FFMC must maintain proper books of accounts, logbooks for activities, and transaction records, including travelers’ cheques.

 

Eligibility Criteria for an FFMC License

• The company must be incorporated under the Companies Act, 2013.
• Entities with any criminal record are not eligible.
• Foreign exchange activities must be specified in the Memorandum of Association (MOA).
• The business must commence operations within six months of obtaining the license, or it will lapse.
• Minimum net-owned fund requirements:
  • Single branch: ₹25 lakhs
  • Multiple branches: ₹50 lakhs

 

Benefits of an FFMC License

1. Expands Business Opportunities – Enables participation in international trade, increasing revenue through foreign exchange transactions.
2. Legitimate Currency Exchange Services – Allows the purchase and sale of foreign exchange per RBI regulations.
3. Foreign Currency Encashment – Provides currency exchange services, including the encashment of foreign currency notes.
4. Enhanced Credibility – Businesses with an FFMC license gain trust and credibility in the financial sector.
5. Diverse Foreign Exchange Activities – FFMCs can:
   • Buy and sell foreign exchange.
   • Provide forex services for private and business travel.
   • Enter into franchise agreements to expand operations.
   • Facilitate foreign currency transactions, subject to RBI approval.

 

Registration Requirements

• The entity must hold a valid FFMC license issued by RBI.
• No legal proceedings should be pending against the company or its directors.
• The company must satisfy the required net-owned fund criteria.

Procedure to Obtain an FFMC License

1. Application Submission – Submit a detailed application to the RBI’s regional office.
2. Director Evaluation – The RBI assesses the directors under the ‘fit and proper’ criteria.
3. Approval Process – If the application meets all requirements, RBI grants the license within 2-3 months.
4. Final Clearance – The RBI’s empowered committee makes the final decision.

 

Required Documents

• Certificate of Incorporation
• Memorandum of Association (MOA)
• Business Clause Declaration for Money Changing Activities
• Applicant Bank Report (CIR Format)
• Latest Audited Balance Sheet
• Net-Owned Fund Certificate from a Statutory Auditor
• Declaration of No Legal Proceedings Against the Company or its Directors
• Undertaking to Employ Competent Staff for Money Changing Activities

Conclusion

Obtaining an FFMC license ensures compliance with RBI regulations and enhances business credibility in the foreign exchange sector. With structured procedures and benefits, businesses can legally and efficiently engage in currency exchange, expanding their financial capabilities in the global market.