TaxTMI 
TaxTMI 
Master Circular on Memorandum of Instructions governing money changing activities (As updated on March 25, 2015)
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncing and other Approvals for Authorised Money Changers (AMCs) SECTION II Guidelines for Grant of Authorisation for Additional Branches :- SECTION III Guidelines for appointment of Agents / Franchisees by Authorized Dealer Category - I Banks, Authorized Dealers Category - II and FFMCs :- SECTION IV Guidelines for Renewal of licences of existing FFMCs : SECTION V Operational Instructions SECTION VI KYC/ AML/ CFT Guidelines SECTION VII Revocation of Licence SECTION VIII 'Fit and proper' criteria for directors of FFMCs / non-bank ADs Category - II Annex-I Application Form for FFMC licence under section 10(1) of FEMA, 1999 Annex-II Form RMC-F Annex-III FLM 1 Annex-IV FLM 2 Annex-V FLM 3 Annex-VI FLM 4 Annex-VII FLM 5 Annex-VIII FLM 6 Annex-IX FLM 7 Annex- X FLM 8 Annex- XI Statement of Purchase transactions of USD 10,000 and above Annex- XII Statement showing summation of Foreign Currency Account opened in India out of export proceeds of Foreign Currency Notes/ encashed Travellers' Cheques Annex- XIII Statement of the amount of foreign currency written off during ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f applicants, other than banks, should be calculated as per the following. (a) Owned Funds :- (Paid-up Equity Capital + Free reserves + Credit balance in Profit & Loss A/c) minus (Accumulated balance of loss, Deferred revenue expenditure and Other intangible assets) (b) Net Owned Funds :- Owned funds minus the amount of investments in shares of its subsidiaries, companies in the same group, all (other) non-banking financial companies as also the book value of debentures, bonds, outstanding loans and advances made to and deposits with its subsidiaries and companies in the same group in excess of 10 per cent of the Owned funds. (ii) Documentation Application in the form, as at Annex - I, should be submitted to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls, along with the following documents: • Copy each of the Certificate of Incorporation and Certificate of Commencement of Business of the company. • Memorandum and Articles of Association containing a provision for undertaking money changing business or an appropriate amendment to this eff....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e by the Empowered Committee The request for issuance of FFMC licence would be considered by the Regional Office concerned of the Reserve Bank on the basis of the clearance by an Empowered Committee, set up for the purpose. (v) Reserve Bank's decision in the matter of granting approval or otherwise will be final and binding. (vi) On obtaining approval from the Reserve Bank, a copy of the registration under Shops & Establishment Act or any other documentary evidence such as rent receipt, copy of lease agreement, etc. should be submitted to the Regional Office concerned of the Reserve Bank before commencement of the business. (vii) The FFMC should commence its operations within a period of six months from the date of issuance of licence and inform the Regional Office concerned of the Reserve Bank. (viii) New FFMCs should carry out their activities as per the instructions specified in SECTIONS V and VI below and other instructions issued by the Reserve Bank from time to time. [Note:- Urban Cooperative Banks (UCBs), fulfilling the eligibility norms, would be considered for authorization as Authorised Dealer Category-I / Authorised Dealer Category-II only.] SECTION ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dence such as rent receipt, copy of lease agreement, etc. should be submitted to the Regional Office concerned of the Reserve Bank before commencement of business at an additional branch. 4. For opening Foreign Exchange Counters (full-fledged branches/ extension counters) at the international airports in India, AD Category-I banks/ AD Category - II/ FFMCs should adhere to following conditions. • Foreign Exchange Counters in the arrival halls in international airports in India shall ideally be established after the Customs Desk (Green Channel/Red Channel). However, Foreign Exchange Counters may also be established between the Immigration Desk and the Customs Desk in international airports in India subject to the condition that these counters shall only purchase foreign currency and sell Indian Rupees (INR) and "Encashment Certificates" shall invariable be issued by the money changers to the customers. • Foreign Exchange Counters in the departure halls in international airports in India shall be established before the Customs Desk or the immigration desk, whichever comes first. However, to enable the non-residents to convert their unspent/excess Indian Ru....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... working days from the date of purchase. (c) The maintenance of proper record of transactions by the franchisee. (d) The on-site inspection of the franchisee by the franchiser should be conducted at least once a year. 4. Procedure for application An AD Category - I Bank / AD Category - II/ FFMC should apply to the respective Regional Office of the Reserve Bank, in Form RMC-F (Annex-II) for appointment of franchisees under this Scheme. The application should be accompanied by a declaration that while selecting the franchisees, adequate due diligence has been carried out and that such entities have undertaken to comply with all the provisions of the franchising agreement and prevailing Reserve Bank regulations regarding money changing. Approval would be granted by the Reserve Bank for the first franchisee arrangement. Thereafter, as and when new franchisee agreements are entered into, these would have to be reported to the Reserve Bank in Form RMC-F (Annex-II) on a post-facto basis along with similar declaration as indicated above. 5. Due Diligence of Franchisees The AD Category Banks - I / ADs Category - II / FFMCs should undertake the following minimum checks whil....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... defined by the respective State Governments/ Union Territories) and the North-Eastern States, the distance restriction given in point (i) above is not applicable. 7. Training Franchisers are expected to impart training to the franchisees as regards operations and maintenance of records. 8. Reporting, Audit and Inspection The franchisers, i.e. the AD Category-I Banks / ADs Category-II / FFMCs, are expected to put in place adequate arrangements for reporting of transactions by the franchisees to the franchisers on a regular basis (at least monthly). Regular spot audits of all locations of franchisees, at least once in six months, should be conducted by AD Category-I Banks / ADs Category-II / FFMCs. Such audits should involve a dedicated team and 'mystery customer' (individuals acting as potential customers to experience and measure the extent up to which people and process perform as they should) concept should be used to test the compliance level of the franchisees. A system of annual inspection of the books of the franchisees should also be put in place. The purpose of such inspection is to ensure that the money changing business is being carried out by the fra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Reserve Bank may prescribe, before the expiry of the licence. Where a person submits an application for the renewal of his money changer's licence, the licence shall continue in force until the date on which the licence is renewed or the application is rejected, as the case may be. No application for renewal of a money-changer's licence shall be made after the expiry of the licence. SECTION V Operational Instructions 1. Bringing in and taking out of Foreign Exchange (i) Foreign exchange in any form can be brought into India freely without limit provided it is declared on the Currency Declaration Form (CDF) on arrival to the Custom Authorities. When foreign exchange brought in the form of currency notes or travellers' cheques does not exceed US$ 10,000/- or its equivalent and / or the value of foreign currency notes does not exceed US$ 5,000/- or its equivalent, declaration thereof on CDF is not insisted upon. (ii) Taking out foreign exchange in any form, other than foreign exchange obtained from an authorized dealer or a money changer is prohibited unless it is covered by a general or special permission of the Reserve Bank. Non-residents, however, have general pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eligible to avail of this quota for private visits provided the applicant is not availing of facilities for remittance of his salary, savings, etc., abroad in terms of extant regulations. (II) Business visits AMCs may sell foreign exchange to persons resident in India for undertaking business travel or for attending a conference or specialized training or for maintenance expenses of a patient going abroad for medical treatment or check up abroad or for accompanying as attendant to a patient going abroad for medical treatment / check-up up to the limits (currently US $ 25,000 per visit) specified in Schedule III to FEMA (Current Account Transactions) Rules, 2000. (III) Forex Pre-paid Cards Authorised Dealers Category-II may issue forex pre-paid cards to residents travelling on private/business visit abroad, subject to KYC/AML/CFT requirements. However, the settlement in respect of forex pre-paid cards may be effected through AD Category-I banks. Conditions • The Reserve Bank will not generally, prescribe the documents which should be verified by the AMCs while releasing foreign exchange. In this connection, attention of AMCs is drawn to sub-section (5) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etion, unspent Indian currency up to Rs. 10,000 in the possession of non-residents if, for bonafide reasons, the person is unable to produce an Encashment Certificate after ensuring that the departure is scheduled to take place within the following seven days. Note (2) : ADs Category - I, ADs Category - II and FFMCs may provide facility for reconversion of Indian Rupees to the extent of Rs. 50,000/- to foreign tourists (not NRIs) against ATM Receipts based on the following documents. • Valid Passport and VISA • Ticket confirmed for departure within 7 days. • Original ATM slip (to be verified with the original debit/ credit card). 7. Cash Memo AMCs may issue a cash memo, if asked for, on official letterhead to travellers to whom foreign currency is sold by them. The cash memo may be required for production to emigration authorities while leaving the country. 8. Rates of Exchange AMCs may put through transactions relating to foreign currency notes and travellers' cheques at rates of exchange determined by market conditions and in alignment with the ongoing market rates. 9. Display of Exchange Rate Chart AMCs should displ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....usting all available options for recovery of the amount. Any write-off in excess of the above amount, would require the approval of the Regional Office concerned of the Foreign Exchange Department of the Reserve Bank. 14. Registers and Books of Accounts of Money-changing Business (i) AMCs shall maintain the following Registers in respect of their money-changing transactions: • Daily Summary and Balance Book (Foreign currency notes / coins) in form FLM 1 (Annex-III). • Daily Summary and Balance Book (Travellers' cheques) in form FLM 2 (Annex-IV). • Register of purchases of foreign currencies from the public in form FLM 3 (Annex-V). • Register of purchases of foreign currency notes / coins from authorized dealers and authorized money changers in form FLM 4 (Annex-VI). • Register of sales of foreign currency notes / coins and foreign currency travellers' cheques to the public in form FLM 5 (Annex-VII). • Register of sales of foreign currency notes / coins to authorized dealers / Full Fledged Money Changers / overseas banks in form FLM 6 (Annex-VIII). • Register of travellers' c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... carrying out their inspection. Failure to produce any books of account or other document or to furnish any statement or information or to answer any question relating to the money changing transactions to the Inspecting Officers, shall be deemed to be a contravention of the provisions of the Act ibid. 17. Concurrent Audit (i) AMCs should put in place a system of Concurrent Audit of the transactions undertaken by them. (ii) All single branch AMCs having a turnover of more than US $ 100,000 or equivalent per month . Single branch AMCs having turnover of less than US $ 100,000 or its equivalent may institute a system of quarterly audit. AMCs having multiple branches, may put in place a system of Concurrent Audit which will cover 80 per cent of the transactions value-wise under a system of monthly audit and rest 20 per cent of the transactions value-wise under quarterly audit. (iii) Appointment / selection of concurrent auditors is left to the discretion of the AMCs. The concurrent auditors should check all the transactions of the AMCs and ensure that all the instructions issued by the Reserve Bank from time to time have been complied with. The Statutory Auditors are requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate from the statutory auditors regarding the NOF as on the date of the balance sheet. As AMCs are expected to maintain the minimum NOF on an ongoing basis, if there is any erosion in their NOF below the minimum level, they are required to bring it to the notice of the Reserve Bank immediately along with a detailed time bound plan for restoring the Net Owned Funds to the minimum required level. 21. Participation by Full Fledged Money Changers (FFMCs) and Authorised Dealers Category-II (ADs Category-II) in the Currency Futures and Exchange traded Currency Options markets FFMCs and ADs Category-II [which are not Regional Rural Banks (RRBs), Local Area Banks (LABs), Urban Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs)], having a minimum net worth of Rs. 5 crore, may participate in the designated currency futures and currency options on exchanges recognized by the Securities and Exchange Board of India (SEBI) as clients only for the purpose of hedging their underlying foreign exchange exposures. FFMCs and ADs Category-II which are RRBs, LABs, UCBs and NBFCs, may be guided by the instructions issued by the respective regulatory Departments of the Reserve Ban....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion reports from market, etc. FFMCs / non-bank ADs Category - II should obtain necessary information and declaration from the proposed / existing directors for the purpose in Proforma given at the end. (b) The process of due diligence should be undertaken by the FFMCs / non-bank ADs Category - II at the time of appointment / renewal of appointment. (c) The Boards of the FFMCs / non-bank ADs Category - II should constitute Nomination Committees to scrutinize the declarations. (d) Based on the information provided in the signed declaration, Nomination Committees should decide on the acceptance or otherwise and may make references, where considered necessary to the appropriate authority / persons, to ensure their compliance with the requirements indicated. (e) FFMCs / non-bank ADs Category - II should obtain annually as on 31st March a simple declaration that the information already provided has not undergone change and where there is any change, requisite details are furnished by the directors forthwith. (f) Further, the candidate should normally not exceed 70 years of age, should not be a Member of Parliament / Member of Legislative Assembly / Member of Legislative Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6. Copy of Memorandum of Association together with a letter indicating the clause which provides for taking up money changer's business. 7. Confidential report from the applicant's bank/s in CIR format. 8. Net Owned Funds A copy of the latest Audited Balance Sheet of the applicant company together with a certificate from their Statutory Auditors certifying their Net Owned Funds as on the date of application and calculation thereof is to be enclosed. 9. Declaration to the effect that the company or any of its directors are not under investigation/adjudication of any law enforcing agencies, such as DoE/DRI and also that no criminal proceedings filed by Crime Investigation Agencies are pending against the company or any of its directors. 10. Undertaking to post competent staff to handle the money changer's business. 11. Name, designation of persons authorised to deal in foreign exchange. 13. A brief write up of the activities of the applicant/nature of business. 14. Whether the applicant had applied earlier for FFMC / RMC licence. If so, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Other (Pl. specify) I. Opening Balance II. Add: Purchases (i) Purchases from the public (ii) Purchases from authorized dealers, money- changers and franchisees (iii) Import from abroad for replenishment of stock Total purchases Total (I + II) III. Less Sales: (i) Sales to public (ii) Sales to authorized dealers/ full-fledged money changers (iii) Despatched abroad for realization Total Sales IV. Closing Balance (I + II - III) N.B: In cases where forged notes etc. are detected, the closing balance may be adjusted with remarks indicating the amount and the reasons for writing off. Date: Name:__________________________ Designation:_____________________ Annex-IV [See SECTION V, Paragraph 14 (i) (b)] FLM 2 Daily Summary and Balance Book (Travellers' cheques) Date:_______________ Pound Sterling U.S. Dollar Euro Yen Other (Pl. specify) I. Opening Balance II. Add: 1) Purchases from the public 2) Purchases from others (including fresh stock received) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Designation:____________________ Annex-VI [See SECTION V, Paragraph 14 (i) (d)] FLM 4 Register of purchases of foreign currency notes/coins from Authorised dealers and authorised money-changers Date Sr. No. Name and address of the authorised dealer/ authorised money-changers from whom purchased Currency Amount Rate Rupee equivalent Remarks 1. 2. 3. 4. 5. 6. 7. 8. Date: Name:_______________________________ Designation:__________________________ Annex-VII [See SECTION V, Paragraph 14 (i) (e)] FLM 5 Register of sales of foreign currencies to the public Date Sr. No. Name of the tenderer Nationality & Full Address Details of Identification Document Name of the sponsoring Organisation Country/ies of visit Purpose of visit Duration of stay abroad (No. of days) 1. 2. 3. 4. 5. 6. 7. 8. 9. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or FFMCs) Summary statement of purchases and sales of foreign currency notes during the month of __________20 Name and address of money changer RBI Licence No.________ USD GBP EURO JPY Others (Specify) A. Opening balance Purchases of foreign currency notes from (a) Public (b) RMCs/FFMCs/ADs including imports. (c) Agents/Franchisees B. Total Purchases (a) + (b) + (c) Sales of foreign currency notes under (a) BTQ (b) Business Visits (c) Sales to other FFMCs/ADs including exports C. Total Sales [ (a) + (b) + (c) ] Closing balance (A+B - C) &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(S1102) (h) Emigration Fees (S1202) (i) Emigration Consultancy Fees (S1006) (k) Sales to other FFMCs/ADs including exports C. Total Sales [ (a) + (b) + (c) + (d) + (e) + (f) + (g) + (h )+ (i) + (j)+ (k) ] Closing balance (A+B - C) We hereby certify that the statement is a true and correct account of all transactions undertaken during the month in accordance with the Foreign Exchange Regulations. (Signature of Authorised Official) Place: Date: Name: __________________________ Designation : _____________________ Annex- XI [See SECTION V, Paragraph 15 (ii)] Statement of Purchase transactions of USD 10,000 and above for the month of ______ Date of transaction Name and address of the person surrendering the foreign currency Amount Currency/ TCs Signature of Authorized Official with Seal Annex- XII [See SECTION V, Paragraph 15 (iii)] Statement showing summation of Foreign Currency Account opened in India out of export proceeds of Foreign Currency Notes/ encashed Travellers....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(DIR Series) Circular Date 1. A.P. (DIR Series) Circular No. 43 [ A.P.(FL Series) Circular No. 1] November 12, 2002 2. A.P. (DIR Series) Circular No.57[ A.P.(FL/ RL Series) Circular No. 04] March 9, 2009 3. A.P. (DIR Series) Circular No.06 [A.P.(FL/ RL Series) Circular No. 01] August 3, 2009 4. A.P. (DIR Series) Circular No. 17 [ A.P.(FL Series) Circular No. 04] November 27, 2009 5 A.P.(DIR Series) Circular No.18 [ A.P.(FL Series ) Circular No. 01] November 25, 2010 6 A.P. (DIR Series) Circular No.20 [A.P. (FL/RL Series) Circular No.03] November 30, 2010 7 A.P. (DIR Series) Circular No.24 [A.P. (FL/RL Series) Circular No.05] December 13, 2010 8 A.P. (DIR Series) Circular No.25 [A.P. (FL/RL Series) Circular No.06] December 22, 2010 9 A.P. (DIR Series) Circular No.27 [A.P. (FL/RL Series) Circular No.08] December 22, 2010 10 A.P. (DIR Series) Circular No.40 [A.P. (FL/RL Series) Circular No.10] January 25, 2011 11 A.P. (DIR Series) Circular No.49 [A.P. (FL/RL Series) Circular No.11] April 06, 2011 12 A.P. (DIR Series) Circular No.51 [A.P. (FL/R....