What is an FFMC License?
Fledged Money Changers are the entities that are authorised by the Reserve Bank of India whose main work is to conduct money-changing activities within India. Their main work is to purchase the foreign exchange from the individuals who arrive in the country and then sell it for specific purposes. Simply we can say that the main work is to convert the foreign currency to Indian rupees and vice versa. It is strictly prohibited to engage in forex trading activities without a valid FFMC License which is issued by the RBI. If any individuals without a valid license take part in such business may face penalties.
Concept of Cancellation of FFMC License
According to section 10(1) of FFMA, 1999, Reserve Bank of India have the power to revoked the license issued for Full Fledged Money Changers under specific circumstances.
Grounds under which the Reserve Bank of India can Revoke the FFMC License:
1. If the revocation is in the best interest of the public at large.
2. If the Licensee violates the rules of upholding the license.
Reasons for Cancellation of the FFMC License
1. Poor Record- keeping
If any individual is taking the FFMC license then they are obligated to maintain the transparency and accuracy of transaction records. It is compulsory to conduct routine audits to ensure compliance and if there is any deficiency found that can lead to the revocation of the license.
2. Mismatching the Conversion Rates
In India, Full-fledged Money Changer can provide foreign exchange services to Indian nations, foreign visitors, and NRIs at persuasive exchange rates. If any licensee manipulates the conversion rates for their gains is a violation of the law which has legal consequences. If the Reserve Bank of India finds such irregularities, it may revoke the license.
3. Provisions Violation
FFMCs must have to follow the legal provisions for their operations. If the individual does not follow these norms may lead to potential fines and revocation of license.
Preventive Measures for FFMC License Cancellation
Display the Exchange Rate chart
FFMCs must display the exchange rate chart which is accessible to the public. The chart includes information about the exchange rates for foreign currency notes and the major currencies of traveller’s cheques.
Prevention of Counterfeit Currency accumulation
If accidentally FFMC accepts counterfeit foreign currency notes from customers they must have approval from management regarding this.
Conduct Employee Training protocols.
The FFMCs must conduct employee training programs that cover the policies and procedures regarding money-changing activities. The main purpose of this training is to ensure transparency within the organisation.
Conduct Regular Audit of Finances to maintain Transparency
.If the FFMC or authorised money changer income exceeds the prescribed limit, then it is necessary to conduct a regular financial audit to restore transparency and integrity.
Reapplication After FFMC License Cancellation
There is the opportunity granted by the Reserve Bank of India for reapplication of FFMC License.
Conditions which is not allowed for Reapplication
If your previous license was cancelled by the Reserve Bank of India due to public interest, you cannot apply for the license again.
If you gain the license through the sale, you are not eligible for the same.
If your license is cancelled by the Reserve Bank of India due to your involvement in non-ethical work you are not eligible for applying.
A condition that is allowed for Reapplication
If you surrendered your previous FFMC License by yourself then the Reserve Bank of India have no issue with the reapplication.
If there are any reasonable reasons presented before the RBI, an opportunity for the reapplication may granted.
Conclusion
For starting the business of Full Fledged Money Changer it is required to have the license which is issued by the Reserve Bank of India. But to have the FFMC License you must follow all the rules regulations and guidelines given by the RBI regarding the FFMC license.
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