FFMC License India

Overview

Every foreign tourist landing in India with dollars to exchange, and every Indian traveller buying forex before a business trip, passes through a chain the RBI watches closely. At the retail end of that chain sit Full Fledged Money Changers — non-bank companies the RBI authorises to buy foreign currency from anyone and sell it for travel purposes. It is a straightforward business with a serious licence: you are handling the country's foreign exchange at street level, so the regulator wants capital, clean ownership, real infrastructure and airtight KYC before you open the counter.

The governing rulebook is the RBI's Master Direction on Money Changing Activities (current through November 2025). It sets out who may apply, how much capital they need, what they may and may not do, and how the RBI supervises them afterwards. The licence is granted selectively — "fit and proper" promoters, an Empowered Committee's clearance, and the RBI's discretion all stand between the application and the authorisation.

This guide covers the full journey: eligibility, the net-owned-funds math that trips up most applicants, the document dossier, the application steps, what happens after licensing, and the upgrade path to Authorised Dealer Category-II for those who outgrow the FFMC frame.

Is an FFMC licence right for you?

This licence fits if:

• You run (or plan) a forex retail business: tourist-area counters, airport locations, corporate travel desks, or online forex ordering with physical delivery.
• You can lock in ₹25–50 lakh of genuine net owned funds and maintain it continuously.
• Your promoters and directors have clean regulatory records and can pass fit-and-proper scrutiny.
• You are prepared for KYC/AML compliance as a daily operating discipline, not a file in a drawer.

Consider alternatives if:

• You want to handle trade transactions (import/export payments) — that needs AD Category-II or a bank, not an FFMC.
• You only want to *buy* forex occasionally as a side activity — there is no "small" FFMC; the licence and its compliance load are the same.
• Your capital is thin or your group has enforcement history — the RBI will find both.
• You want a purely digital cross-border remittance play — that is a different authorisation (money transfer / payment systems), not money changing.

What an FFMC may and may not do

You may: purchase foreign currency notes, coins and traveller's cheques from residents and non-residents; sell foreign exchange for private visits and business travel (including forex prepaid cards for such travel, per the directions); operate the licensed branch(es) and RBI-approved counters.

You may not: sell forex for any purpose outside private and business travel; undertake trade-related or capital-account transactions; open additional branches, airport counters or temporary facilities without prior RBI approval; or let your net owned funds slip below the minimum at any point.

The boundary is deliberate. The RBI keeps retail travel money with FFMCs and everything commercial with authorised dealers. Drift across it — say, facilitating an import payment — and you are outside your authorisation.

Eligibility conditions

• Company form: the applicant must be a company registered under the Companies Act, 1956 or 2013. Firms, LLPs and proprietorships cannot apply.
• Net owned funds: ₹25 lakh for a single-branch licence; ₹50 lakh for multiple branches — maintained on a continuous basis, certified by the statutory auditor.
• MOA objects: the Memorandum of Association must carry money changing as an object of the company. This is checked, not assumed.
• Clean record: no cases filed or pending against the company, its promoters or directors with the Directorate of Enforcement or the Directorate of Revenue Intelligence.
• Fit and proper: promoters and directors must meet the RBI's fit-and-proper standards — competence, integrity, and no history of regulatory censure.
• Infrastructure: genuine business premises, systems for KYC/AML/CFT compliance, and trained staff — the RBI assesses readiness, not just paperwork.

The NOF computation deserves a closer look because it is where applications quietly fail. Think of it like a landlord's security deposit that must never dip: owned funds are your paid-up equity plus free reserves plus the credit balance in P&L, minus accumulated losses, deferred revenue expenditure and intangible assets. From that, you subtract the company's investments — in subsidiaries, group companies, debentures, bonds, loans and advances beyond the permitted thresholds. What remains must be ₹25 or ₹50 lakh. A company with ₹60 lakh of equity but ₹40 lakh parked in a subsidiary may well fall short. Get the statutory auditor to certify the computation before you apply, not after the RBI queries it.

Documents required

• Certified copy of the Certificate of Incorporation
• Certificate of Commencement of Business (where applicable)
• MOA and AOA (showing the money-changing object)
• Certified board resolution resolving to undertake money-changing business and to apply for the licence
• Audited balance sheets and profit & loss accounts for the preceding three years
• Statutory auditor's certificate of net owned funds
• Banker's confidential report on the company
• Declarations: no cases with the Directorate of Enforcement or Directorate of Revenue Intelligence (company and directors); readiness to implement KYC/AML/CFT policies
• Details of promoters/directors for fit-and-proper assessment
• [NEEDS VERIFICATION: whether the current electronic application adds any prescribed forms or annexures beyond the Master Direction checklist.]

The application process — step by step

Step 1 — Incorporate (or repurpose) the company

Ensure the company exists under the Companies Act with money changing in the MOA objects — amend the MOA first if you are repurposing an existing company.

Step 2 — Build and certify net owned funds

Bring the NOF to ₹25/₹50 lakh through genuine capital and reserves, and have the statutory auditor certify the computation per the Master Direction's definition.

Step 3 — Prepare the compliance backbone

Draft the KYC/AML/CFT policy framework, appoint responsibility, and set up transaction-monitoring and record-keeping systems. The RBI wants to see readiness, not intentions.

Step 4 — Compile the dossier

Assemble incorporation documents, three years of audited financials, the NOF certificate, the banker's confidential report, board resolution and all declarations.

Step 5 — File electronically with the RBI Regional Office

Submit the application through the RBI's designated electronic portal to the Regional Office having jurisdiction. [NEEDS VERIFICATION: current portal — PRAVAAH vs APConnect — and jurisdictional mapping.]

Step 6 — Answer RBI queries

Expect questions on NOF computation, source of funds, promoter backgrounds, business projections and AML preparedness. Precise, documented answers keep the file moving.

Step 7 — Empowered Committee and fit-and-proper clearance

The application passes through internal scrutiny including the Empowered Committee; licensing is selective and discretionary.

Step 8 — Receive the authorisation and commence business

On approval, the RBI grants the FFMC licence. You must commence money-changing operations within six months — a licence left unused invites cancellation.

Common reasons FFMC applications stall

Most delays are avoidable. The patterns we see repeatedly:

NOF arithmetic that doesn't survive scrutiny. The applicant shows ₹25 lakh of equity but the RBI's computation — after stripping intangibles, accumulated losses and group investments — lands below the line. Run the Master Direction's definition with your statutory auditor before filing, not after the first query.

MOA objects added as an afterthought. A one-line amendment inserting "money changing" among fifty unrelated objects reads as opportunistic. The objects should present money changing as a genuine, intended business — ideally with allied travel/forex services.

A banker's report that says nothing. Some bankers issue bland confirmations. The RBI reads these; a report that avoids comment on conduct of accounts or financial standing invites questions rather than answering them.

KYC/AML framework copied from a template. A policy that names systems you don't have and people you haven't hired is worse than a thin but honest one. The RBI assesses readiness — show the actual monitoring workflow, the responsible officer, and the record-keeping design.

Source-of-funds fog. Capital introduced just before the application, routed through layered entities, with no clear trail. Document every infusion: board resolutions, bank statements, valuation reports where shares were issued at premium.

Timelines

• MOA amendment (if needed) and NOF build-up: 1–3 months
• Policy framework and systems: 1–2 months (parallel)
• Dossier compilation including banker's report: 1 month
• RBI processing: 4–8 months from complete filing [NEEDS VERIFICATION: current regional-office bands]

Realistic end-to-end: 8–12 months for a prepared applicant.

Fees and costs

• RBI application fee: as prescribed [NEEDS VERIFICATION: current fee, if any]
• ₹25/₹50 lakh NOF: capital to be raised and maintained, not a fee
• Premises, systems and staffing for a compliant counter
• Statutory audit and NOF certification
• Professional fees: structuring, dossier, RBI liaison — fixed-fee engagement recommended
• Ongoing: compliance staffing, audits, reporting systems

How ComplyKart helps

We handle FFMC licensing end to end: eligibility and NOF structuring, MOA object drafting, the KYC/AML/CFT policy framework, dossier compilation with auditor coordination, the electronic filing, RBI query responses, and post-licence compliance setup (reporting, inspections readiness, renewals). Fixed-fee, milestone-linked.

What we do not do: we do not arrange the ₹25/₹50 lakh capital, we do not influence the RBI's discretionary decision, we do not act as your statutory auditor, and we do not supply the banker's confidential report.

After the licence — ongoing compliance

• Maintain minimum NOF continuously — a dip is a violation, not a technicality
• Implement KYC/AML/CFT on every transaction; report as prescribed
• Obtain prior RBI approval before any additional branch, airport counter or temporary facility
• Commence business within six months of licensing
• Submit prescribed returns and statements to the RBI on schedule
• Cooperate with RBI inspections; keep transaction records audit-ready
• Apply for renewal/continuation as the authorisation terms require [NEEDS VERIFICATION: current licence validity and renewal cycle]

The upgrade path: FFMC to AD Category-II

Outgrowing travel money? An FFMC with a track record can seek upgrade to Authorised Dealer Category-II, which permits all FFMC activities plus specified non-trade current-account transactions and other RBI-approved activities. The upgrade means higher expectations — systems, capital, compliance depth — but it opens the commercial forex segment that FFMCs cannot touch. We advise on timing and readiness for this step.

FFMC vs AD Category-II vs AD Category-I

| Feature | FFMC | AD Category-II | AD Category-I | |---|---|---|---| | Who | Non-bank company | Upgraded FFMCs, select RRBs/UCBs, others | Scheduled commercial banks | | Buy forex | Yes (residents & non-residents) | Yes | Yes | | Sell forex | Only private/business travel | Specified non-trade current account + FFMC scope | All permissible current + notified capital account | | Minimum NOF | ₹25L / ₹50L | Higher, as prescribed [NEEDS VERIFICATION] | Bank capital norms | | Trade transactions | No | Limited as permitted | Yes | | Licence basis | Selective, Empowered Committee | RBI approval | Bank authorisation |

Frequently Asked Questions

1. What is a Full Fledged Money Changer? A company authorised by the RBI under Section 10 of FEMA, 1999, to buy foreign exchange from residents and non-residents and sell it for private and business travel purposes.

2. What is the minimum net owned funds for an FFMC licence? ₹25 lakh for a single-branch FFMC and ₹50 lakh for multiple branches, to be maintained continuously and certified by the statutory auditor.

3. Who can apply for an FFMC licence? Only a company registered under the Companies Act, 2013 (or 1956), with money changing in its MOA objects and no cases pending with the Directorate of Enforcement or Directorate of Revenue Intelligence.

4. What documents are needed for the FFMC application? Certificate of Incorporation, commencement certificate, MOA/AOA, board resolution, three years of audited financials, NOF certificate, banker's confidential report, enforcement declarations, and KYC/AML/CFT readiness confirmation.

5. How is net owned funds calculated for FFMC? Owned funds (paid-up equity + free reserves + P&L credit balance, minus accumulated losses, deferred revenue expenditure and intangibles) less investments in subsidiaries, group companies and specified instruments beyond permitted thresholds.

6. What can an FFMC sell foreign exchange for? Only private visits and business travel — including forex prepaid cards for such travel. Trade, investment or any other purpose is outside the authorisation.

7. Can an FFMC open a branch at an airport? Only with prior RBI approval — as with any additional branch, airport counter or temporary facility.

8. How long does FFMC licensing take? Typically 4 to 8 months of RBI processing from a complete application; 8–12 months end-to-end including preparation. [NEEDS VERIFICATION: current bands.]

9. Must the business start immediately after licensing? Money-changing operations must commence within six months of the licence; an unused licence risks cancellation.

10. Is the licence granted as of right? No. Licensing is selective — fit-and-proper assessment, Empowered Committee clearance, and the RBI's discretion all apply.

11. Can a partnership firm or LLP get an FFMC licence? No. Only companies registered under the Companies Act are eligible.

12. What is the difference between an FFMC and an AD Category-II? An FFMC handles travel-related forex; an AD Category-II does everything an FFMC does plus specified non-trade current-account transactions. FFMCs can upgrade to AD-II.

13. Do I need RBI approval to add a second branch? Yes — and the NOF requirement steps up to ₹50 lakh for multiple branches.

14. What happens if NOF falls below the minimum? It is a breach of the authorisation conditions — restore it immediately and expect RBI scrutiny. Continuous maintenance is the requirement, not a one-time test.

15. Are FFMC transactions subject to KYC? Yes. A full KYC/AML/CFT framework is mandatory, with transaction monitoring, record-keeping and reporting as prescribed.

16. Can an FFMC deal in traveller's cheques? Yes — purchase of foreign currency notes, coins and traveller's cheques is within the permitted scope.

17. Is there an application fee? As prescribed by the RBI from time to time. [NEEDS VERIFICATION: current fee.]

18. Can foreign nationals be directors of an FFMC? They can, subject to the company's law requirements and the RBI's fit-and-proper assessment of all directors. [NEEDS VERIFICATION: any additional conditions.]

19. What are the penalties for unlicensed money changing? Operating without authorisation violates FEMA and attracts penalties under the Act, including on directors and persons in charge.

20. Can an FFMC upgrade to AD Category-I? AD Category-I is for scheduled commercial banks. A non-bank FFMC's upgrade path is to AD Category-II.

FAQ

Frequently asked questions

21 answers from our consultants.

Why does it cost what it does when the government fee is free or nil?+

You pay for our expert's time — document checking, filing, follow-ups — not the government. The government fee goes to the government; our fee is for the work we do so you don't have to figure it out yourself.

1. What is a Full Fledged Money Changer?+

A company authorised by the RBI under Section 10 of FEMA, 1999, to buy foreign exchange from residents and non-residents and sell it for private and business travel purposes.

2. What is the minimum net owned funds for an FFMC licence?+

₹25 lakh for a single-branch FFMC and ₹50 lakh for multiple branches, to be maintained continuously and certified by the statutory auditor.

3. Who can apply for an FFMC licence?+

Only a company registered under the Companies Act, 2013 (or 1956), with money changing in its MOA objects and no cases pending with the Directorate of Enforcement or Directorate of Revenue Intelligence.

4. What documents are needed for the FFMC application?+

Certificate of Incorporation, commencement certificate, MOA/AOA, board resolution, three years of audited financials, NOF certificate, banker's confidential report, enforcement declarations, and KYC/AML/CFT readiness confirmation.

5. How is net owned funds calculated for FFMC?+

Owned funds (paid-up equity + free reserves + P&L credit balance, minus accumulated losses, deferred revenue expenditure and intangibles) less investments in subsidiaries, group companies and specified instruments beyond permitted thresholds.

6. What can an FFMC sell foreign exchange for?+

Only private visits and business travel — including forex prepaid cards for such travel. Trade, investment or any other purpose is outside the authorisation.

7. Can an FFMC open a branch at an airport?+

Only with prior RBI approval — as with any additional branch, airport counter or temporary facility.

8. How long does FFMC licensing take?+

Typically 4 to 8 months of RBI processing from a complete application; 8–12 months end-to-end including preparation. [NEEDS VERIFICATION: current bands.]

9. Must the business start immediately after licensing?+

Money-changing operations must commence within six months of the licence; an unused licence risks cancellation.

10. Is the licence granted as of right?+

No. Licensing is selective — fit-and-proper assessment, Empowered Committee clearance, and the RBI's discretion all apply.

11. Can a partnership firm or LLP get an FFMC licence?+

No. Only companies registered under the Companies Act are eligible.

12. What is the difference between an FFMC and an AD Category-II?+

An FFMC handles travel-related forex; an AD Category-II does everything an FFMC does plus specified non-trade current-account transactions. FFMCs can upgrade to AD-II.

13. Do I need RBI approval to add a second branch?+

Yes — and the NOF requirement steps up to ₹50 lakh for multiple branches.

14. What happens if NOF falls below the minimum?+

It is a breach of the authorisation conditions — restore it immediately and expect RBI scrutiny. Continuous maintenance is the requirement, not a one-time test.

15. Are FFMC transactions subject to KYC?+

Yes. A full KYC/AML/CFT framework is mandatory, with transaction monitoring, record-keeping and reporting as prescribed.

16. Can an FFMC deal in traveller's cheques?+

Yes — purchase of foreign currency notes, coins and traveller's cheques is within the permitted scope.

17. Is there an application fee?+

As prescribed by the RBI from time to time. [NEEDS VERIFICATION: current fee.]

18. Can foreign nationals be directors of an FFMC?+

They can, subject to the company's law requirements and the RBI's fit-and-proper assessment of all directors. [NEEDS VERIFICATION: any additional conditions.]

19. What are the penalties for unlicensed money changing?+

Operating without authorisation violates FEMA and attracts penalties under the Act, including on directors and persons in charge.

20. Can an FFMC upgrade to AD Category-I?+

AD Category-I is for scheduled commercial banks. A non-bank FFMC's upgrade path is to AD Category-II.

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