What are the general conditions to be meet for obtaining a full fledged money changer license ?
1) Eligibility- The guidelines for issue of new FFMC License and renewal of FFMC License are as follows-
(a) The Applicant has to be a company registered under the Companies Act, 2013 or under any previous Companies Act.
(b) The Minimum Net Owned funds required for consideration as FFMC are as follows-
Single Branch FFMC - Rs.25 Lacs Minimum Net Owned Funds
Multiple branch FFMC- Rs. 50 Lacs Minimum Net Owned Funds
Note:- The Net Owned Funds of Applicants, Other than Banks, should be calculated as per following-
(a) Owned Funds- (Paid Up Equity Capital +Free reserves or credit balance in profit and Loss account) ( Accumulated Balance of Loss, deferred revenue expenditure and other intangible assets.
(b) Net Owned Funds- Owned Funds minus the amount of investments in shares of its subsidiaries, companies in the same group, all (Other) Non banking Financial Companies as also the book value of debentures, Bonds, outstanding loans and advances made to and deposits with its subsidiaries and companies in the same group in excess of 10 percent of the owned Funds.
What are “Fit and Proper” criteria for the applicant FFMCs?
The Boards of FFMCs/ Non Bank ADs Category- II should undertake a process of due diligence to determine the suitability of the person (By Consulting Nomination Committee) for appointment, continuing to hold appointment as a Director on the board, based upon qualification, expertise, track record, integrity and other fit and proper criteria.
The applicants should normally should not exceed 70 years of age , should not be member of Parliament, Member of Legislative Assembly/ Member of Legislative council. For assessing the integrity and suitability, factors like criminal record if any, financial position, civil action initiated to pursue personal debts, refusal of admission or expulsion from professional bodies, sanctions imposed by regulators or similar bodies, previous questionable business practices etc.
Note- If any case by Directorate of Enforcement/ Directorate of revenue intelligence or any other law enforcing authorities, is initiated/ pending against any company/ its Directors, the company will not be considered as Fit and Proper and its application will not be considered for Licensing as FFMC.
What is procedure and documents required for FFMCs license application in India?
Application in the prescribed form should be submitted to the respective regional office of the Foreign exchange Department of the Reserve Bank under whose Jurisdiction the registered office of an Applicant falls, along with the following Documents-
-Copy of Certificate of Incorporation
-Memorandum and Articles of association contains the provision for undertaking
-Money changing business or an appropriate amendment to this effect filed with the Company law board.
-Copy of Latest Audited Accounts from a certificate from the statutory auditors certifying the net owned funds as on the date of application. Copies of the audited balance sheet and Profit and Loss account of the company for the last three years, wherever applicable.
-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 declaration to that effect that proper policy framework on KYC/AML/ CFT/, in accordance with the guidelines issued by RBI, Department of Banking Regulation, Central Office as referred to in their master Direction - Know Your Customer (KYC) Direction, 2016, and other instructions in this regard so far and from time to time in future, mutatis mutandis, applicable to APs, will be put in place of obtaining the approval of the reserve bank and before commencement of operations.
-Details of associated concerns operating in the Financial Sector, like NBFCs etc.
-A certified copy of the board resolution for undertaking money changing business.
How does money changer take money? ?
The difference between that and regular retail operations is that the money changer can get burned by value changes in the market. Money changers makes their profit from the spread, that is difference between the prices they quote at which they will buy a currency from you sell it back.
What is authorized dealer category II?
It means entities which are authorized by RBI to deal in foreign exchange for as specified purposes and shall include upgraded FFMCs and selected RRBs, selected UCBs and other entities.