A Full Fledged Money Changer or an FFMC is a money changer authorized to purchase foreign exchange from non-residents visiting India and residents. These entities can also sell foreign exchange for private and business travel.
The Reserve Bank of India has well-defined the operational structure of an FFMC in the realm of Indian law. Every registered licensed FFMC must adhere to these operating instructions in order to function smoothly in the Indian and international markets. We have discussed some of these regulations in this article, so read carefully. Read More: Producer Company Registration
Bringing in and taking out of Foreign Exchange
- Foreign exchange can be brought into India freely without limit. But they must provide the Currency Declaration Form (CDF) declaration on arrival to the Customs Authorities. Suppose foreign exchange does not exceed USD 10,000 or its equivalent. Also, the value of foreign currency notes does not exceed USD 5,000 or its equivalent. In that case, the declaration on CDF will not be insisted upon.
- The RBI prohibits taking out the foreign exchange in a form other than foreign exchange from a money changer. But the FFMC must cover it with the general or special permission of the Reserve Bank. Non-residents, however, have general permission to take out an amount not exceeding the originally brought in, subject to compliance with the above provisions.
Purchases of Foreign Currency from Public
- Authorized Persons of an FFMC license can freely purchase foreign currency notes, coins, and travellers cheques from residents as well as non-residents. The FFMC must ask the tenderer to produce the same when it brings the foreign currency in by declaring on form CDF. The production of declaration in CDF should invariably be insisted upon.
- Requests for payment in cash in Indian Rupees to resident customers towards the purchase of foreign currency notes and/or Travellers’ Cheques from them may accede to the extent of only USD 1,000 or its equivalent per transaction. Read More: Society Registration
- Requests for payment in cash by foreign visitors or Non-Resident Indians may accede to only USD 3,000 or its equivalent per transaction.
- Authorized Persons can sell Indian Rupees to foreign tourists/visitors against International Credit Cards or International Debit Cards and take prompt steps to obtain reimbursement through normal banking channels.
While making payments in Indian Rupees to resident customers towards the purchase of foreign currency notes and/or traveller’s cheques, the FFMC license can make the payment in the following:
- Cash
- Account payee cheque
- Demand draft
- INR debit cards
- Electronic funds transfer through banking channel
Encashment Certificate
- Authorized Persons of the FFMC can issue a certificate of encashment. This issuance can be of purchases of foreign currency notes, coins, and travellers cheques from residents as well as non-residents. The FFMC must not issue these certificates bearing authorized signatures on the letterhead of the money changer. Also, they must maintain proper records for this purpose.
- Suppose the FFMC does not issue an encashment certificate. In that case, the FFMC license must draw the customers’ attention to the fact that it cannot allow the unspent local currency to convert into foreign currency only against the production of a valid encashment certificate. Read More: FEMA Consultant
Purchases from other FFMCs
An FFMC can purchase from other FFMCs foreign currency notes, coins, and traveller’s cheques tendered in the course of business. The FFMC must pay the rupee equivalent of the amount of foreign exchange purchased only by the following:
- Crossing account payee cheque
- Demand draft
- Banker’s cheque
- Pay order
- Electronic funds transfer through banking channel
After registering your business as an FFMC license, you must observe the operational instructions by the RBI to ensure that the business runs smoothly in the market.
