Foreign Exchange business in India is regulated by the Reserve Bank of India (RBI) to ensure smooth and legal handling of foreign currencies. If you are planning to enter this sector, you must understand the role of an FFMC license. FFMC stands for Full Fledged Money Changer, a license issued by the RBI that allows individuals or companies to deal in foreign exchange under regulated guidelines.
Let’s explore the business activities permitted with an FFMC license in India.
What is an FFMC License?
An FFMC license is issued under Section 10 of the Foreign Exchange Management Act (FEMA), 1999. It authorizes a business entity to buy and sell foreign currencies and provide currency exchange services to travelers, tourists, NRIs, and other clients legally within India.
Who Can Apply for an FFMC License?
Entities such as:
- Private Limited Companies
- Public Limited Companies
are eligible to apply for an FFMC license. The applicant company must meet the minimum net owned fund requirement:
- ₹25 lakhs for a single-branch FFMC
- ₹50 lakhs for a multiple-branch FFMC
Business Activities Permitted with an FFMC License
Here are the major business operations an FFMC-licensed entity can legally carry out:
1. Buying Foreign Exchange from Residents and Tourists
FFMCs are permitted to purchase foreign currency notes, coins, and traveler’s cheques from:
- Indian residents returning from abroad
- Tourists and NRIs who need to exchange their leftover foreign currency
This enables travelers to convert their unused foreign currency back into Indian Rupees (INR) easily and legally.
2. Selling Foreign Exchange for Permitted Purposes
FFMCs are authorized to sell foreign exchange in the form of currency or prepaid forex cards for purposes such as:
- Private travel abroad (tourism)
- Business travel
- Overseas education
- Medical treatment abroad
- Emigration
Note: Customers must provide proper documentation like a valid passport, visa, and travel tickets to avail of these services.
3. Issuing Prepaid Forex Cards
With RBI approval, FFMCs may also partner with authorized banks to issue prepaid foreign exchange travel cards for travelers. These cards can be used internationally for expenses during travel, making currency management convenient.
4. Appointing Franchisees for Restricted Activities
FFMCs are allowed to appoint franchisees under the RBI's franchise model to undertake restricted money-changing activities such as:
- Only buying foreign currency from customers (no selling)
- Assisting in collecting forex from inbound tourists
However, the principal FFMC must ensure that all franchisees follow RBI regulations.
5. Providing Currency Exchange Services at Airports and Hotels
Many FFMCs operate at international airports, seaports, or 5-star hotels to facilitate quick and authorized currency exchange services to international travelers.
Important Compliance for FFMC License Holders
To maintain an FFMC license, companies must:
- Maintain proper records of every foreign exchange transaction
- Submit periodic returns to the RBI
- Comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) guidelines
- Ensure that all transactions are for bonafide purposes only
Conclusion
An FFMC license opens up a wide range of legal business activities in the foreign exchange sector. From buying and selling currency to issuing forex cards and appointing franchisees, the license provides flexibility while ensuring strict regulatory compliance. If you’re planning to start a currency exchange business in India, obtaining an FFMC license is not just important—it’s mandatory.
To make the process easier and more accurate, it is always recommended to consult professional license consultants.
Need Help with FFMC License Registration?
Registrationwala is India’s trusted consultant for FFMC license application and RBI compliance. Visit www.registrationwala.com to get expert guidance and start your money exchange business legally and smoothly.
