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
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.