What is a Money Changer?

A money changer is an authorized entity permitted to buy foreign currency from non-residents visiting India and sell foreign currency for permitted private or business travel purposes. Such entities are commonly known as Full Fledged Money Changers, or FFMCs.

As per Section 10 of the Foreign Exchange Management Act, 1999, the Reserve Bank of India authorizes eligible entities to conduct money changing activities. No person or business can carry on money changing operations in India without obtaining a valid license from the Reserve Bank of India.

Mandatory Compliance for Money Changers: Records and Registers

• Maintain the Daily Summary and Balance Book for foreign currency notes and coins in Form FLM 1.
• Maintain the Daily Summary and Balance Book for travellers’ cheques in Form FLM 2.
• Maintain the register of purchases of foreign currencies from the public in Form FLM 3.
• Maintain the register of purchases of foreign currency notes and coins from authorized dealers and authorized money changers in Form FLM 4.
• Maintain the register of sales of foreign currency notes, coins and foreign currency travellers’ cheques to the public in Form FLM 5.
• Maintain the register of sales of foreign currency notes and coins to authorized dealers, Full Fledged Money Changers and overseas banks in Form FLM 6.
• Maintain the register of travellers’ cheques surrendered to authorized dealers, authorized money changers or exported in Form FLM 7.
• Submit the Cash Transaction Report to FIU-IND by the 15th day of the succeeding month. While filing CTR, individual transaction details below Rs. 50,000 are not required to be furnished.
• Submit the Suspicious Transaction Report within 7 days of concluding that any transaction, including an attempted transaction, is suspicious.

Activities Permitted for a Full Fledged Money Changer

A Full Fledged Money Changer is permitted to undertake specific money changing activities subject to RBI guidelines and applicable compliance requirements.

• A Full Fledged Money Changer may enter into franchise agreements for restricted money changing activities, including conversion of foreign currency notes, coins or travellers’ cheques into Indian Rupees.
• An FFMC or its franchisees may purchase foreign currency notes, coins or travellers’ cheques from residents and non-residents of India.
• An FFMC may sell Indian Rupees to foreign tourists or visitors against international debit cards or international credit cards, provided reimbursement is received through normal banking channels.
• FFMCs may sell foreign exchange for permitted business visits, private visits and forex prepaid card requirements.

Eligibility Criteria for Obtaining an FFMC License

An applicant must satisfy the prescribed eligibility requirements before applying for a Full Fledged Money Changer License.

• The applicant entity must be incorporated as a company under the Companies Act, 2013.
• The company must maintain a minimum net-owned fund of Rs. 25 lakh for a single-branch license and Rs. 50 lakh for a multiple-branch license.
• The object clause of the Memorandum of Association must specifically include money changing or foreign exchange-related activities.
• There should be no pending civil or criminal proceedings against the applicant company with enforcement authorities or the Department of Revenue Intelligence.
• After obtaining the license, the company must commence money changing business within 6 months from the date of license issuance and intimate the Reserve Bank of India accordingly.

Post-Approval Requirements for FFMCs

After obtaining the Full Fledged Money Changer License, the license holder must comply with the following post-approval requirements before and after commencing business operations:

• Submit a copy of the Shops and Establishment Act registration or other documentary proof, such as a rent receipt or lease agreement, to the concerned RBI Regional Office before starting business operations.
• Carry out all money changing activities strictly in accordance with the instructions and guidelines issued by the Reserve Bank of India.
• Display a copy of the money changing license issued by the Reserve Bank of India at every place of business.
• Maintain a proper system of concurrent audit for all transactions undertaken by the FFMC.
• Submit the annual audited balance sheet to the respective RBI Regional Office within the prescribed timeline.

Renewal of FFMC License

An application for renewal of the Full Fledged Money Changer license should be filed at least one month before the date of expiry of the existing license. If the FFMC license expires, the Reserve Bank of India may not accept any request for restoration or renewal after the expiry date. Therefore, timely renewal is essential to continue money-changing business operations without interruption.