What changed
RBI issued Master Circular No.10/2013-14 on July 1, 2013, consolidating all existing instructions on money changing activities into a single document. The circular includes guidelines for licensing, branch approvals, appointment of franchisees, KYC/AML/CFT norms, and revocation of licences. It has a sunset clause and was withdrawn on July 1, 2014, replaced by an updated version.
What it means for you
Banks and authorised persons now have a single reference for all money changing rules, simplifying compliance. The circular reinforces that only licensed entities can conduct money changing, with penalties for violations under FEMA. It also clarifies that franchisees of ADs or FFMCs within 10 km of Pakistan or Bangladesh borders may sell the bordering country's currency with prior RBI approval, while other franchises cannot sell foreign currency.
What you must do
- Ensure your entity holds a valid money changer's licence before conducting any foreign exchange transactions.
- Review and comply with the consolidated KYC/AML/CFT guidelines for all money changing activities.
- If operating franchisees within 10 km of Pakistan/Bangladesh borders, obtain prior RBI approval for selling bordering country currency.
- Note that this master circular will stand withdrawn on July 1, 2014 and be replaced by an updated version.
Who it affects
All Authorised Persons in Foreign Exchange, Authorised Money Changers (AMCs), Full Fledged Money Changers (FFMCs), Authorised Dealer Category-I Banks, Authorised Dealers Category-II, Franchisees of ADs and FFMCs
What is the sunset clause in this master circular?
The circular includes a sunset clause, meaning it will stand withdrawn on July 1, 2014, and be replaced by an updated master circular on the same subject.
Can franchisees of ADs or FFMCs sell foreign currency?
Generally, franchisees cannot sell foreign currency. However, those functioning within 10 km of Pakistan or Bangladesh borders may sell the bordering country's currency with prior RBI approval.
What happens if someone conducts money changing without a licence?
Any person found undertaking money changing business without a valid licence is liable to be penalised under the Foreign Exchange Management Act, 1999.