What changed
RBI issued a master circular that brings together all existing guidelines on money changing activities into a single document. The circular includes a sunset clause, meaning it will be withdrawn on July 1, 2011, and replaced by an updated version.
What it means for you
Banks and money changers now have a single reference for all rules on licensing, branch approvals, franchisee appointments, and KYC/AML compliance. The sunset clause signals that RBI expects periodic updates, so institutions must stay alert for the next circular. The circular also clarifies that only certain RMCs near Pakistan/Bangladesh borders can sell foreign currency, while other franchisees cannot.
What you must do
- Review the master circular to ensure your money changing operations comply with all consolidated instructions.
- Update internal policies and training materials to reflect the unified guidelines on licensing, KYC/AML, and franchisee appointments.
- Prepare for the sunset clause by monitoring RBI for the updated master circular expected by July 1, 2011.
- Verify that any franchisee arrangements adhere to the restriction that only RMCs and franchisees within 10 km of Pakistan/Bangladesh borders, with prior RBI approval, may sell the bordering country's currency; other franchisees cannot sell foreign currency.
Who it affects
Authorised Dealer Category-I Banks, Authorised Dealer Category-II, Full Fledged Money Changers (FFMCs), Restricted Money Changers (RMCs), Franchisees of ADs and FFMCs
What is the sunset clause in this master circular?
The circular includes a sunset clause stating it will stand withdrawn on July 1, 2011, and will be replaced by an updated master circular on the same subject.
Can all franchisees sell foreign currency?
No. Only RMCs and franchisees operating within 10 km of Pakistan/Bangladesh borders, with prior RBI approval, may sell the bordering country's currency. Other franchisees cannot sell foreign currency.
What are the key sections covered in this circular?
The circular covers licensing for AMCs, branch authorisation, appointment of agents/franchisees, renewal of FFMC licences, operational instructions, and KYC/AML/CFT guidelines.