Current · Source: Reserve Bank of India · RBI/2024-25/39 · issued 27 May 2024 · ~2 min read
Quick answerFrom July 1, 2024, FFMCs and non-bank AD Category-II must sell at least 75% of purchased foreign currency notes to the public quarterly. Also, annual audited balance sheets with NOF certificates are due by October 31. This curbs idle forex holdings and boosts compliance.
The rule, in the simplest words
From July 1, 2024, money changers (FFMCs and non‑bank AD Category‑II) must sell at least 75% of the foreign currency notes they buy to the public each quarter.
They must keep records of these sales and purchases and make them available for audit.
Each year, they must submit an audited balance sheet and a certificate from their statutory auditor about Net Owned Funds (NOF) to the RBI Regional Office by October 31.
The rule is meant to stop money changers from holding too much idle foreign currency.
How it plays out — a real example
A gold‑loan officer in Indore checks that a local money changer sold at least 75% of the foreign notes it bought in the last quarter. He asks the changer for the quarterly sale records and the annual NOF certificate before approving a loan, feeling confident that the changer is following RBI rules.
What changed
RBI has mandated that from July 1, 2024, FFMCs and non-bank AD Category-II must ensure the value of foreign currency notes sold to the public is at least 75% of the value purchased from other FFMCs/ADs, calculated quarterly. Additionally, these entities must now submit their annual audited balance sheet and a statutory auditor's certificate on Net Owned Funds (NOF) to the concerned RBI Regional Office by October 31 each year.
What it means for you
This move forces money changers to actively sell foreign currency to the public rather than hoarding it, reducing idle balances and improving forex circulation. The new audit and NOF certification requirement tightens financial oversight, ensuring these entities maintain adequate capital. Banks dealing with FFMCs/ADs should expect more diligent counterparties and may need to adjust their own forex sourcing strategies.
What you must do
Update internal systems to track quarterly sale-to-purchase ratios for foreign currency notes, ensuring the 75% threshold is met from July 1, 2024.
Advise FFMC and non-bank AD Category-II clients on the new compliance requirements, including maintaining sale data for audit.
Prepare to submit annual audited balance sheets and NOF certificates to the RBI Regional Office by October 31 each year.
Review existing agreements with FFMCs/ADs to align with the new sale verification process.
Who it affects
Full Fledged Money Changers (FFMCs), Non-bank Authorised Dealers Category-II, Banks acting as Authorised Dealers, RBI Regional Offices
❓ Common questions
What is the 75% rule and when does it start?
From July 1, 2024, FFMCs and non-bank AD Category-II must sell at least 75% of the foreign currency notes they buy from other FFMCs/ADs to the public, calculated on a quarterly basis. This prevents idle forex holdings.
What is the new deadline for submitting audited balance sheets?
FFMCs and non-bank AD Category-II must submit their annual audited balance sheet and a statutory auditor's certificate on Net Owned Funds (NOF) to the concerned RBI Regional Office by October 31 each year.
How should we verify the sale requirement when buying from other FFMCs/ADs?
When selling foreign currency to another FFMC or non-bank AD Category-II, you should ask for their data on sales to the public to ensure they meet the 75% threshold. Maintain records for audit.
📜 Read the original circular — full text as issued by RBI
RBI/2024-25/39
A.P. (DIR Series) Circular No. 08
May 27, 2024
To
All Authorised Persons in Foreign Exchange
Madam/ Sir
Instructions on Money Changing Activities
Attention is invited to FED Master Direction No.3/2015-16 dated January 01, 2016 (updated from time to time) on Money Changing Activities.
2. In terms of extant instructions, Full Fledged Money Changers (FFMCs)/non-bank Authorised Dealers (ADs) Category-II may obtain their normal business requirements of foreign currency notes from other FFMCs and Authorised Dealers (ADs) in India. Further, they are also required to keep balances in foreign currencies at reasonable levels to avoid build-up of idle balances.
3. In this regard, it has been decided that from July 1, 2024, value of foreign currency notes sold by FFMCs / non-bank ADs Category -II to the public for permitted purposes should not be less than 75% of the value of foreign currency notes purchased from other FFMCs/ ADs, on a quarterly basis. Data of such sale and purchase should be maintained and made available for audit / inspection. FFMCs/ADs selling foreign currency may also ascertain the ‘sale to public’ requirement of the buying FFMCs/non-bank ADs Category II, by seeking relevant data from such entities.
4. Further, it has also been decided that FFMCs/non-bank ADs Category-II shall submit their annual audited balance sheet to the concerned Regional Office of the Reserve Bank along with a certificate from their statutory auditors regarding the NOF as on the date of the balance sheet, latest by October 31 of the year concerned.
5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
6. The aforesaid FED Master Direction No.3 is being updated to reflect these changes.
Yours faithfully,
(N Senthil Kumar)
General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-25/39 · issued 27 May 2024. The plain-English explanation above is BankPulse’s own independent summary.
Update internal systems to track quarterly sale-to-purchase ratios for foreign currency notes, ensuring the 75% threshold is met from July 1, 2024.
📜 Compliance
Advise FFMC and non-bank AD Category-II clients on the new compliance requirements, including maintaining sale data for audit.
Prepare to submit annual audited balance sheets and NOF certificates to the RBI Regional Office by October 31 each year.
Review existing agreements with FFMCs/ADs to align with the new sale verification process.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (Full Fledged Money Changers (FFMCs), Non-bank Authorised Dealers Category-II, Banks acting as Authorised Dealers, RBI Regional Offices), your first concrete step on “RBI Tightens Money Changer Rules: 75% Sale Mandate & Audit Deadline” is: “Update internal systems to track quarterly sale-to-purchase ratios for foreign currency notes, ensuring the 75% threshold is met from July 1, 2024.” (RBI issued this 27 May 2024).
Action required: Update internal systems to track quarterly sale-to-purchase ratios for foreign currency notes, ensuring the 75% threshold is met from July 1, 2024.
Action required: Advise FFMC and non-bank AD Category-II clients on the new compliance requirements, including maintaining sale data for audit.
Action required: Prepare to submit annual audited balance sheets and NOF certificates to the RBI Regional Office by October 31 each year.
Action required: Review existing agreements with FFMCs/ADs to align with the new sale verification process.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12689&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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