TaxTMI 
TaxTMI 
Master Direction - Money Changing Activities (Updated as on June 24, 2026)
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....ection 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.^2 4. The list of underlying notifications/circulars which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions are covered in the Master Direction - Reporting under Foreign Exchange Management Act, 1999 dated January 01, 2016, as amended from time to time. The Authorised Persons may refer to respective circulars/ notifications for detailed information, if so needed. 5. It may be noted that whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the rules, regulations, notifications, directions or orders or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/constituents. The Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (N Senthil Kumar) Chief General Manager ^1 Para 2 omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: ....
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....dex S.No Contents 1 Section I Introduction 2 Section II [Omitted] 3 Section III Guidelines for appointment of Agents / Franchisees by Authorised Dealers Category I, Authorised Dealers Category II and FFMCs 4 Section IV [Omitted] 5 Section V Operational Instructions 6 Section VI KYC/ AML/ CFT Guidelines 7 Section VII [Omitted] 8 Section VIII [Omitted] 9 Annex Standard Operating Procedure (SOP) for non-bank money changers during elections 10 Appendix List of circulars consolidated Master Direction - Money Changing Activities SECTION-I 1. Introduction Money changing business can only be undertaken by entities authorised by the Reserve Bank under Section 10 of the Foreign Exchange Management Act, 1999 and any person found undertaking money changing business without a valid licence is liable to be penalised under the Act ibid. This document contains the various instructions relating to the subject of money changing activities including functioning of Full Fledged Money Changers (FFMCs), non-bank Authorised Dealers Category-II as well as the conduct of foreign exchange transactions with their customers/constituents.3 2. [Omitted]4 3 Para 1 of Section I m....
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....for private and business travel purposes only. Note: Authorised Dealer Category-I Banks/ Authorised Dealers Category-II/ FFMCs may appoint franchisees, at their option, for the purpose of carrying restricted money changing business i.e. conversion of foreign currency notes, coins or travellers' cheques into Indian Rupees." 3. [Omitted]5 5 Para 3 of Section I omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "3. Guidelines for issuance of FFMC Licence FFMCs are authorised to purchase foreign exchange from non-residents visiting India and residents, and to sell foreign exchange for private and business travel purposes only. The guidelines for issue of a new FFMC licence and renewal of FFMC licence, guidelines for grant of authorisation for additional branches, guidelines for obtaining approval for appointment of agents/franchisees and guidelines on Know Your Customer (KYC)/Anti Money Laundering (AML)/Combating of Financing of Terrorism (CFT) for Authorised Persons (AP), are given below. (i) Entry Norms (a) The applicant has to be a company registered under the Companies Act, 1956/ Companies Act 2013/....
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....erve Bank and before commencement of operations. (g) Details of sister / associated concerns operating in the financial sector, like NBFCs, etc. (h) A certified copy of the board resolution for undertaking money changing business. (iii) Basis for Approval (a) Since several FFMCs are already functioning, fresh licences will be issued on a selective basis to those who comply with all the licensing requirements. (b) 'Fit and proper' criteria for the applicant FFMCs (also applicable to non-bank ADs Category - II): If any case by DoE / DRI or any other case by any other law enforcing authorities, is initiated / pending against any company / its directors, the company will not be considered as 'fit and proper' and its application will not be considered for licensing as FFMC. (c) 'Fit and proper' criteria for directors of FFMCs (also applicable to non-bank ADs Category - II): Please see SECTION- VIII for the details in this regard. (d) Clearance 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 Committe....
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....RI) or any other law enforcing authorities against the applicant or its directors and that no criminal cases are initiated / pending against the applicant or its directors. Note: No new branch licence shall be issued to any FFMC/non-bank AD Category-II, against whom any major DoE / DRI case is pending. In DoE / DRI pending cases of a minor nature, a decision will be taken by the Reserve Bank on a case by case basis. The categorisation of pending DoE / DRI cases as major / minor will be at the discretion of the Reserve Bank and the decision of the Reserve Bank will be final and binding. Where any DoE / DRI case is adjudicated and penalty is imposed, a view will be taken, on the basis of the nature of the offence, provided no fresh case is instituted by DoE / DRI. (c) A declaration that there is no change in the KYC/AML/CFT policy framework since its last submission to RBI. However, in case there is a change, a copy of the revised / latest version of the policy shall be required to be submitted. (d) A declaration to the effect that there is no change in the internal control systems including internal and external audit since submission of the last write-up to RBI. However, i....
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.... Foreign Exchange Counters/branches in the departure halls in international airports in India shall be established before the Customs Desk or the immigration desk, whichever comes first. However, the Foreign Exchange Counters established in the Duty-Free Area or Security Hold Area beyond the Immigration or Customs desk shall allow residents (along with non-residents) to exchange Indian Rupee notes. The limits of carrying Indian Rupees by residents and non-residents shall be as per the para given below at (c) and (d). (c) Resident Indians as well as those Non-residents who are - (i) not citizens of Pakistan or Bangladesh and (ii) not going to Pakistan or Bangladesh, are allowed to take Indian notes up to an amount not exceeding Rs.25,000/- while leaving the country through an airport. (d) Citizens of Pakistan and Bangladesh exiting the country by air are allowed to carry up to a maximum of Rs. 10,000/- up to the boarding point in international airports, but not beyond." 7 Para 1 of Section III modified vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to modification, it read as follows: "Under the Scheme, the Reserve Bank permits ADs Category - I, ADs Cat....
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....has been carried out and that such entities have undertaken to comply with all the provisions of the 5. Due Diligence of Franchisees A franchiser, i.e. AD Category-I Bank/ AD Category-II / FFMC should undertake the following minimum checks while conducting due diligence of its franchisees: i. existing business activities of the franchisee/ its position in the area. ii. minimum Net Owned Funds of the franchisee. iii. Shops & Establishments / other applicable municipal certification in favour of the franchisee. iv. verification of physical existence of location of the franchisee, where restricted money changing activities will be conducted. V. conduct certificate of the franchisee from the local police authorities (certified copy of Memorandum and Articles of Association and Certificate of Incorporation in respect of incorporated entities). Note: Obtaining of Conduct Certificate of the franchisee from the local police authorities is optional for the franchisers. However, the franchisers may take due care to avoid appointing individuals/ entities as franchisees who have cases / proceedings initiated / pending against them by any law enforcing agencies. vi. d....
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....anchiser. Such audits should involve a dedicated team and incognito visits should also 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 franchisees in conformity with the terms of the agreement and prevailing Reserve Bank guidelines and that necessary records are being maintained by the franchisees. 9. Anti-Money Laundering (AML) / Know Your Customer (KYC) / Combating of Financing of Terrorism (CFT) Guidelines Franchisees are required to strictly adhere to the AML / KYC/ CFT guidelines, as applicable to ADs Category-I Banks / ADs Category - II / FFMCs.9 9 Note under Para 9 of Section III omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "Note :- No licence for appointment of franchisees will be issued to any FFMC / non-bank AD Category - II, against whom any major DoE / DRI / CBI / Police case is pending. In case where any FFMC / non-bank AD Category - Il has received one-time approval for appointing franchisees an....
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....mitted, 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 from an FFMC/non-bank AD Category-II for renewal of licence shall be made after expiry of the licence." of foreign currency notes does not exceed USD 5,000 or its equivalent, declaration thereof on CDF is not required. 11 (ii) Taking out foreign exchange in any form, other than foreign exchange obtained from an authorised 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 permission to take out an amount not exceeding the amount originally brought in by them, subject to compliance with the provisions of sub-para (i) above. 2. Purchases of Foreign Currency from Public (i) Authorised Persons and their franchisees may freely purchase foreign currency notes, coins and travellers cheques from residents as well as non- residents. The tenderer shall produce the CDF to the Authorised Persons and their franchisees, if the currency being tendered for exchange has been declared by him in CDF. 12 (ii) Requests for payment ....
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....o the fact that unspent local currency held by non- residents will be allowed to be converted into foreign currency only against production of a valid encashment certificate. 4. Purchases from other FFMCs and Authorised Dealers (ADs) An FFMC/ non-bank AD Category II may purchase from other FFMCs and Authorised Dealers (ADs) any foreign currency notes, coins and encashed traveller's cheques tendered in the normal course of business. Rupee equivalent of the amount of foreign exchange purchased should be paid only by way of crossed account payee cheque/demand draft/banker's cheque / pay order/electronic funds transfer through banking channel. 5. Sale of foreign exchange (I) Private Visits Authorised Persons may sell foreign exchange up to the prescribed ceiling specified in Schedule III to the Foreign Exchange Management (Current Account Transaction) Rules, 2000 during a financial year to persons resident in India for undertaking one or more private visits to any country abroad (except Nepal and Bhutan). Exchange for such private visits will be available on a self-declaration basis to the traveller regarding the amount of foreign exchange availed during a fina....
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.... for travel purposes on the basis of a declaration given by the traveler regarding the amount of foreign exchange availed of during the financial year. iv. Authorised Persons may accept payment in cash below Rs.50,000/- (Rupees fifty thousand only) against sale of foreign exchange for travel abroad (for private visit or for any other purpose). Wherever the sale of foreign exchange is for the amount equivalent to Rs.50,000/- and above whether it involves a single drawal or multiple drawals for a single journey, the payment must be received only by a crossed cheque drawn on the applicant's bank account or crossed cheque drawn on the bank account of the firm sponsoring the visit of the applicant or electronic funds transfer through banking channel by applicant or sponsoring company or banker's cheque / pay order / demand draft. In addition to the payment by Rupees/ through crossed cheque/ banker's cheque/ pay order/ demand draft/electronic funds transfer through banking channel, Authorised Persons may also accept the payments made by the traveller through debit cards/ credit cards/ prepaid cards for travel abroad (for private visit or for any other purpose) provided-....
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....llows: "Authorised Persons 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." travellers' cheques for all the major currencies and the card rates for any day, should be updated, latest by 10:30 a.m. 10. Display of Money Changing Licence An FFMC/ non-bank AD Category II should at each of its business place, display at a prominent place in or near the public counter, a copy of the money changing licence issued by Reserve Bank of India. 11. Foreign Currency Balances (i) An FFMC/non-bank AD Category-II should keep balances in foreign currencies at reasonable levels and avoid buildup of idle balances with a view to speculating on currency movements. (ii) Franchisees should surrender foreign currency notes, coins and travellers' cheques purchased only to their franchisers within seven working days. (iii) The transactions between authorised dealers and FFMCs should be settled by way of account payee crossed cheques / demand drafts/electronic funds transfer through banking channel. Under no circumstances should settle....
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.... being found fake/forged subsequently, FFMCs/ non- bank ADs Category II may write- off up to USD 2000 per financial year after approval of their Top Management after exhausting all available options for recovery of the amount. Any write-off in excess of the above amount, for any reason including but not limited to foreign currency notes being found to be fake or forged would require the approval of the Regional Office concerned of the Foreign Exchange Department of the Reserve Bank. The request should be submitted through the APConnect application (Inserted vide A.P. (DIR Series) Circular No.01 dated April 06, 2023). approval of their Top Management after exhausting all available options for recovery of the amount. 15. Registers and Books of Accounts of Money-changing Business (i) 17 [ *** ] (ii) All registers and books should be kept up-to-date, cross-checked and balances verified daily. (iii) Transactions not pertaining to money changing business of the FFMC/ non- bank AD Category II should not be mixed up with money changing transactions. In other words, the registers and books of account should show clearly the trail of transactions pertaining to money changin....
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.... vide AP (DIR Series) Circular No.05 dated November 13, 2020. Prior to deletion, it read 'FFMCs/non-bank ADs Category Il should submit to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank, a monthly statement indicating details of receipt / purchase of USD 10,000 (or its equivalent) and above per transaction in the prescribed format, within 10 days of the close of the month. They should include transactions of their franchisees in their statement.' 22 Deleted vide A.P. (DIR Series) Circular No. 17 dated June 24, 2026. Prior to deletion, it read as follows: "(iii) FFMCs/ non-bank ADs Category II FFMCs should submit a quarterly statement regarding Foreign Currency Account/s maintained in India in their names with AD Category-I Banks to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank as per the prescribed format." 23 Deleted vide A.P. (DIR Series) Circular No. 17 dated June 24, 2026. Prior to deletion, it read as follows: "(iv) An Annual Statement should be submitted by all the FFMCs/ non-bank ADs Category II to the respective Regional Offices of the Foreign Exchange Department, Reserve Bank which have i....
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....gisters are being maintained, · verification that all money changing transactions have been recorded in the respective books and registers, · verification that cash is accepted within the limit of INR 50000, including cases of structuring of transactions into a series of cash transactions below INR 50000, · verification that payments received in non-cash mode from customers are reflected in the bank account statements of the FFMC/non-bank AD Category II (iv) The Statutory Auditors are required to certify that the Concurrent Audit and the internal control systems are working satisfactorily. 19. [Omitted] 24 20. . Opening of Foreign Currency Accounts FFMCs/ non-bank ADs Category II, with the approval of the respective Regional Offices of the Foreign Exchange Department, may be allowed to open Foreign Currency Accounts in India, subject to the following conditions :- 24 Para 19 of Section V omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "19. Temporary Money Changing Facilities FFMCs/non-bank ADs Category II are authorised to transact money changing business only at the location or locatio....
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....al Office concerned of the Reserve Bank, a copy of annual audited balance sheet along with a certificate from the statutory auditors regarding the net worth as on the date of the balance sheet by 31st October every year, and a certificate from the statutory auditors regarding annual forex turnover during the financial year, by 30th April every year. 23. Participation 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 recognised 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 Bank in this regard. 24.28 For opening Foreign Exchange Counters/branches at the international airports in India, AD Category-I banks/ ADs ....
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....country by air are allowed to carry up to a maximum of Rs. 10,000/- up to the boarding point in international airports, but not beyond. 29 Substituted vide A.P. (DIR Series) Circular No. 4 dated April 2, 2026. Prior to substitution it read as: "However, to enable the non-residents to convert their unspent/ excess Indian Rupees above the limits laid down at para (c) and (d) below, Foreign Exchange Counters/branches at the departure halls in the international airports may be established in the Duty Free Area/SHA beyond the Immigration/Customs desk." KYC/ AML/ CFT Guidelines 30 (i) Authorised Persons, which are regulated by the Department of Regulation, Reserve Bank of India, shall be governed by the respective 'Know Your Customer' directions as applicable to them. (ii) Authorised Persons, which are not regulated by the Department of Regulation, Reserve Bank of India, shall be governed by 'Reserve Bank of India (Non-Banking Financial Companies - Know Your Customer) Directions, 2025'. (iii) Authorised Persons shall ensure compliance of directions, as applicable to them, by their agents/ sub-agents/franchisees. [Omitted]31 SECTION VIII [Omitted]3....
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....k ADs Category - II should constitute Nomination Committees to scrutinise 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) The provisions of Companies Act 2013 shall apply with regard to the age of the candidate. Further, the candidate should not be a Member of Parliament / Member of Legislative Assembly / Member of Legislative Council. (g) Any change of directors during the year should be reported to the Regional Office concerned of the Foreign Exchange Department, Reserve Bank of India as given in the Master direction on Reporting. (h) Comments of respective Departments of the Reserve Bank will be obtained on the operations of an applicant who / whose parent organ....