What changed
RBI issued a master circular that brought together all existing instructions on money changing activities into a single document. It included updated guidelines for licensing, branch expansion, franchisee appointments, and KYC/AML/CFT compliance. The circular was set to expire on July 1, 2013, and be replaced by an updated version.
What it means for you
Banks and money changers now have a single reference point for all rules governing foreign exchange money changing, reducing confusion from multiple circulars. The sunset clause ensures the guidelines are reviewed and updated periodically. Entities must comply with stricter KYC/AML norms and net owned fund requirements to obtain or retain FFMC licenses.
What you must do
- Ensure your entity holds a valid FFMC license from RBI before conducting money changing business.
- Maintain minimum net owned funds: ₹25 lakh for single branch FFMC, ₹50 lakh for multiple branch FFMC, as specified in the circular.
- Adhere to KYC/AML/CFT guidelines detailed in Annex-I of the circular.
- If appointing franchisees, follow the guidelines in Section III and note restrictions on selling foreign currency near Pakistan/Bangladesh borders.
- Prepare for the sunset clause by staying updated on the replacement circular expected after July 1, 2013.
Who it affects
All Authorised Persons in Foreign Exchange (AD Category-I Banks, AD Category-II, FFMCs), Franchisees of money changers, Companies applying for FFMC licenses, Compliance and KYC teams at banks and money changers
What is the minimum net owned fund requirement for an FFMC?
The minimum net owned fund (NOF) for a single branch FFMC is ₹25 lakh, and for a multiple branch FFMC it is ₹50 lakh, as per the circular.