Foreign Currency Exchange Business in India

How Can You Start Foreign Currency Exchange Business in India

Online Legal India LogoBy Online Legal India Published On 13 Sep 2022 Updated On 10 Jan 2023 Category FFMC

You must have considered starting a currency exchange business because the likelihood of making big earnings is higher. The world is still ruled by paper money, notwithstanding the recent rapid growth of digital money. Following the announcement of demonetization in 2016, many experienced a sense of reality check. For Indian citizens who were uninformed of what was coming, it was chaos. Demonetization has brought clean money into the Indian economy, which is a beneficial effect that cannot be ignored. Conducting import and export business in overseas marketplaces is harder without a steady flow of foreign currency exchange business.

If you want to start a foreign currency exchange business, you must be aware of every aspect of managing a profitable enterprise. Before starting a foreign currency exchange business, obtaining an FFMC licence is essentially necessary. Let's clarify what the term "FFMC" means.


What does FFMC License stand for?


A Full Fledged Money Changer, or FFMC, is an authorised organisation having the authority to buy foreign currency from Indian residents and non-residents and sell it to individuals travelling overseas for both personal and professional reasons. The FFMC licencing requirements are listed below:


  • Only authorised money changers (AMCs) are permitted to conduct foreign currency exchange business, as stated in Section 10 of the Foreign Exchange Market Act, 1999.
  • No one is allowed to advertise their foreign currency exchange business until they have a current RBI-issued FFMC licence.
  • Anyone who is found guilty of operating a foreign currency exchange business without a licence is subject to punishment under the aforementioned Act.
  • The RBI has given specific hotels and businesses instructions on how to handle foreign notes, coins, and checks in order to make things easier for foreign travellers.


Therefore, obtaining an FFMC licence is the first step in starting a foreign currency exchange business in India. You may be asking how to do so.


Eligibility criteria to acquire an FFMC license


If you fit the following criteria, you may be qualified for an FFMC licence:


  • An (FFMC) Full Fledged Money Changer License can only be applied for by an organisation registered under the Companies Act of 2013.
  • To apply for a single-branch licence, your firm must have Net Owned Funds (NOF) of at least INR 25 lakhs; for a multiple-branch licence, the minimum NOF requirement is INR 50 lakhs.
  • With the implementation of DRI, there shouldn't be any active criminal or civil cases involving your organisation (Directorate of Revenue Intelligence).
  • The entity's prior money-changing activities must be reflected in the object clause of the Memorandum of Association (MOA).
  • Your firm must carry out its foreign currency exchange business operations after receiving the FFMC licence within six months of the license's issuing date.


Documents required for FFMC License


According to RBI regulations, the following lists of documents must be submitted in order to obtain an FFMC License:


  • A copy of your company's commencement and incorporation certificates.
  • A paragraph in your memorandum and articles of association establishing your ability to conduct foreign currency exchange business operations must be included.
  • Send copies of your company's audited profit and loss statements and balance sheets for the last three years.
  • A copy of your recent audited accounts must be attached with a certificate from the Statutory Auditors attesting to the Net Owned Funds (NOF) as of the application date.
  • Declare that no legal action has ever been taken against your company by the Directorate of Enforcement (DoE) or the Directorate of Revenue Intelligence (DRI) or is now ongoing. You must confirm that you haven't engaged in any criminal activity and have never been a part of such situations.
  • A statement to the effect that a proper KYC/CFT/AML policy structure, adhering to RBI requirements, will be implemented after obtaining the Reserve Bank's permission and prior to the start of operations.
  • A certified copy of the board resolution must be provided if you want to start a foreign currency exchange business.


Have you previously created a checklist? You must still have a perception of information regarding the FFMC License application process.


Step by Step guide to obtaining FFMC Licence


You must adhere to the following rules in order to launch a currency exchange business in India:


  • Send a thorough and well-written application for the FFMC licence to the Reserve Bank of India's relevant regional office.
  • The Empowered Committee formed for this purpose will approve the application.
  • RBI is always in charge of making the final decision regarding the issuance of the licence.
  • If you meet RBI's "fit and proper" requirements in every area, you will acquire the Full Fledged Money Changer (FFMC) License in 2 to 3 months.
  • Before starting your foreign currency exchange business, you must submit a copy of your registration to the regional office along with any supporting documentation, such as a copy of your leasing agreement or rent receipt.


Your entity will not be eligible to apply for an FFMC License if a law enforcement agency is pursuing legal action against it in any way.


Registers and books of accounts of currency exchange business


The following registers must be kept up to date by authorised money changers regarding their transactions:


  • Daily summary and balance sheet (foreign coins and notes) in FLM 1 format.
  • Travellers' Cheques Daily Summary and Balance Book in Form FLM 2.
  • Public purchases of foreign currency in the form of FLM3 are made.
  • Fill out form FLM 4 to track your purchases of foreign currency coins and notes from approved dealers and money changers.
  • Sales of foreign currency coins, notes, and travellers' checks to the general public are recorded on Form FLM 5.
  • Sales of foreign currency coins and notes to full-service money changers authorised dealers, and foreign banks are recorded using form FLM 6.
  • Register of traveller's checks sent to approved dealers or money changers using form FLM 7.
  • AMCs are required to double-check all the books and registers to make sure that they are periodically updated.
  • It is necessary to construct separate registers for each foreign currency exchange business that the AMC operates.
  • The registers and books of account should provide a clear picture of all transactions involving the business of transferring money.


Foreign currency transfers between branches must be recorded as stock transfers rather than sales.



There is no fast path to success; if you want to operate a foreign currency exchange business, you must fulfil all FFMC licence requirements with the help of Online Legal India’s expert professionals. Effective money exchanges offer a profitable chance to start getting enormous rewards.


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