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Master Direction - Money Changing Activities (Updated as on May 06, 2026)
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....t 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 * Since this Master Direction has been significantly amended, it has been replaced rather than showing the changes in track mode for reader convenience. The previous Master Direction - Money Changing Activit....
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....e discontinued gradually, in any case within two years from May 6, 2026.^7 2. Franchisee A franchisee can be any entity which has a place of business and a minimum Net Owned Funds of Rs.10 lakh. Franchisees can undertake only restricted money changing business. 3. Franchisee Agreement An AD Category-I Bank / AD Category-II / FFMC, as the franchiser, is free to decide on the tenor of the arrangement as also the commission or fee through mutual agreement with the franchisee. The Agency / Franchisee agreement to be entered into should include the following salient features: (a) The franchisees should display the names of their franchisers, exchange rates and that they are authoried only to purchase foreign currency, prominently in their offices. Exchange Rate for conversion of foreign currency into Rupees should be the same or close to the daily exchange rate charged by the AD Category - I Banks / ADs Category - II / FFMC at its branches. (b) The foreign currency purchased by the franchisee should be surrendered only to its franchiser within 7 working days from the date of purchase. (c) The maintenance of proper record of transactions by the franchisee. (d) ....
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.... the franchiser concerned. (iii) Further, in case of areas declared as hilly areas (as 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 to impart training to the franchisees as regards operations and maintenance of records. 8. Reporting, Audit and Inspection The franchisers, i.e. ADs 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 the franchiser. 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 ....
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....y notes and/ or traveller's cheques, payment can be made in cash / by way of account payee cheque / demand draft/ loading in INR debit cards/electronic funds transfer through banking channel, as per prescribed limits. 3. Encashment Certificate (i) Authorised Persons may issue certificate of encashment when asked for in cases of purchases of foreign currency notes, coins and travellers cheques from residents as well as non-residents. These certificates bearing authorised signatures should be issued on the letter head of the money changer and proper record should be maintained. (ii) In cases where encashment certificate is not issued, attention of the customers should be drawn to 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 shou....
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....of FEMA, 1999. ii. In case of issue of travellers' cheques, the traveler should sign the cheques in the presence of an authorised official and the purchaser's acknowledgement for receipt of the travellers' cheques should be held on record. iii. Authorised Persons may release foreign exchange 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/ ....
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....14 9. Display of Exchange Rate Chart Authorised Persons should display at a prominent place in or near the public counter, a chart indicating the rates for purchase/sale of foreign currency notes and 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 settlement be made in cash.....
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....ld require the approval of the Regional Office concerned of the Foreign Exchange Department of the Reserve Bank. ^16The request should be submitted through the APConnect application. 15. Registers and Books of Accounts of Money-changing Business (i) FFMCs/ non-bank ADs Category II 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. • Daily Summary and Balance Book(Travellers' cheques) in form FLM 2. • Register of purchases of foreign currencies from the public in form FLM 3. • Register of purchases of foreign currency notes / coins from Authorised Dealers and FFMCs in form FLM 4. • Register of sales of foreign currency notes / coins and foreign currency travellers' cheques to the public in form FLM 5. • Register of sales of foreign currency notes /coins to Authorised Dealers / FFMCs / overseas banks in form FLM 6. • Register of travellers' cheques surrendered to Authorised Dealers / FFMCs / exported in form FLM 7. (ii) All registers and books should be kep....
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....hould provide all assistance and co-operation to Inspecting Officers in 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. 18. Concurrent Audit (i) FFMCs/ non-bank ADs Category II should put in place a system of Concurrent Audit of the transactions undertaken by them. (ii) All single branch FFMCs having a turnover of more than USD 100,000 or equivalent per month should institute a system of monthly audit. Single branch FFMCs having turnover equal to or less than USD 100,000 or equivalent per month may institute a system of quarterly audit. FFMCs/ non-bank ADs Category II 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 FFMCs/non-bank ADs Category II. The....
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....ould be utilised only for the settlement of remittances sent for permissible purposes and not for the settlement in respect of forex prepaid cards; iii) No idle balance shall be maintained in the said account; and iv) They will be subject to reporting requirements as prescribed from time to time. ^21Non-bank AD Category-II should submit application for opening of nostro accounts through the APConnect application. 22. Submission of Balance Sheet and certificate for maintenance of Net Worth and Forex Turnover^22 An FFMC/non-bank AD Category II shall submit to the Regional 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 (NB....
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....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. SECTION VII [Omitted]^26 SECTION VIII [Omitted]^27 ^28Annex Standard Operating Procedure (SOP) for non-bank money changers during elections The movement of foreign exchange can take place between Authorised Dealer Category I (AD Cat. I), Authorised Dealer Category II (AD Cat. II), Full Fledged Money Changers (FFMC), their offices/branches, their customers and their franchisees. On a request received from the Election Commission of India the following Standard Operating Practice (SOP) for movement of cash (foreign exchange), during elections is being notified: A. Physical Movement- • All movement of Indian currency or foreign exchange should be effected by the person(s) authorised, who should carry the supporting documents while....
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....**] 6 A.P.(DIR Series) Circular No.31 October 03, 2011 7 A.P.(DIR Series) Circular No.33 October 12, 2011 8 A.P.(DIR Series) Circular No.38 October 25, 2011 9 [**] [**] 10 [**] [**] 11 [**] [**] 12 A.P.(DIR Series) Circular No.104 April 04, 2012 13 A.P.(DIR Series) Circular No.109 April 18, 2012 14 [**] [**] 15 A.P.(DIR Series) Circular No.50 November 07, 2012 16 A.P.(DIR Series) Circular No.96 April 5, 2013 17 A.P.(DIR Series) Circular No. 45 September 16, 2013 18 A.P.(DIR Series) Circular No. 146 June 19, 2014 19 A.P.(DIR Series) Circular No.14 July 25, 2014 20 [**] [**] 21 [**] [**] 22 A.P. (DIR Series) Circular No. 05 November 13, 2020 23 A.P. (DIR Series) Circular No.01 April 06, 2023 24 A.P. (DIR Series) Circular No.08 May 27, 2024 25 A.P. (DIR Series) Circular No. 16 November 28, 2025 26 A.P. (DIR Series) Circular No. 4 April 2, 2026 27 A.P. (DIR Series) Circular No. 09 May 06, 2026 ^1 Para 2 omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, ....
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.... subject of money changing activities including authorisation and functioning of Full Fledged Money Changers (FFMCs), non-bank Authorised Dealers Category-II and franchisees of Authorised Persons as well as the conduct of foreign exchange transactions with their customers/constituents." ^4 Para 2 of Section I omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "2. Definitions 2.1 Authorised Person means an authorised dealer, money changer, off-shore banking unit or any other person authorised under sub-section (1) of section 10 to deal in foreign exchange or foreign securities. 2.2 'Authorised Dealer' (AD) means a person authorised as an authorised dealer under sub-section (1) of section 10 of FEMA. 2.3 'Authorised Dealer (AD) Category I' means entities which are authorised by the Reserve Bank to carry out all permissible current and capital account transactions as per directions issued from time-to-time 2.4 'Authorised Dealer (AD) Category II' means entities which are authorised by the Reserve Bank to carry out specified non-trade related current account transactions, all the activities....
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....ds 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 prescribed form should be submitted through the APConnect application (https://apconnect.rbi.org.in/entity) 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: (a) Copy of the Certificate of Incorporation. (b) Memorandum and Articles of Association containing a provision for undertaking money changing business or an appropriate amendment to this effect filed with the Company Law Board. (c) Copy of the latest audited accounts with a certificate from the Statutory Auditors certifying the Net Owned Funds as on the date of application. Copies of the audited Balance Sheet and Profit & Loss Account of the company for the last three years, wherever applicable. (d)....
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....l Office concerned of the Reserve Bank. (h) The 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 authorisation as Authorised Dealer Category-I / Authorised Dealer Category-II only. ^6 Section II omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "Guidelines for Grant of Authorisation for Additional Branches:- 1. No FFMC/non-bank AD Category II shall carry on money changing business at any additional place of business other than its permanent place of business except with the prior approval of the Reserve Bank. An FFMC/non-bank AD Category II which intends to commence money changing business at any additional place of business shall apply 3through the APConnect application to the respective Regional Office of the Foreign Exchange Department under whose jurisdiction the registered office of the applicant falls and the Reserve Bank may approve the additional place of business subject to such conditi....
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....ve Bank. 5. For opening Foreign Exchange Counters/branches/) at the international airports in India, AD Category-I banks/ ADs Category - II/ FFMCs should adhere to following conditions. (a) Foreign Exchange Counters/branches 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. (b) 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 shal....
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....lar declaration as indicated above." ^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 - II has received one-time approval for appointing franchisees and subsequent to the date of approval, any DoE / DRI / CBI / Police case is filed, the FFMC / non-bank AD Category - II should not appoint any further franchisees and bring the matter to the notice of the Reserve Bank immediately. A decision will be taken by the Reserve Bank regarding allowing the FFMC / non-bank AD Category - II to appoint franchisees." ^10 Section IV omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "Guidelines for Renewal of licences of existing FFMCs: 1. The applicant should be a company registered under the Companies Act, 1956/ Companies Act, 2013/ Registration of Companies (Sikkim) Act, 1961 having registered office within the area of jur....
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....rer should be asked to produce the same. The production of declaration in CDF should invariably be insisted upon." ^13 Para 5(III) of Section V modified on May 06, 2026. Prior to modification, it read as follows: "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." ^14 Para 8 of Section V modified on May 06, 2026. Prior to modification, it read as follows: "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." ^15 Inserted vide A.P. (DIR Series) Circular No. 08 dated May 27, 2024 ^16 Inserted vide A.P. (DIR Series) Circular No.01 dated April 06, 2023 ^17 Inserted vide A.P. (DIR Series) Circular No.01 dated April 06, 2023 ^18 Deleted vide AP (DIR Series) Circular No.05 dated November 13, 2020. Prior to deletion, it read 'FFMCs/non-bank ADs Category II should submit to the Regional Office conce....
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....(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." ^25 Substituted vide A.P. (DIR Series) Circular No. 16 dated November 28, 2025. ^26 Section VII omitted vide A.P. (DIR Series) Circular No. 09 dated May 06, 2026. Prior to omission, it read as follows: "Revocation of Licence The Reserve Bank reserves the right to revoke the licence granted to an Authorised Person at any time if the Reserve Bank is satisfied that (a) it is in public interest to do so or (b) the Authorised Person has failed to comply with any condition subject to which the authorisation is granted or has contravened any of the provisions of the Foreign Exchange Management Act, 1999 or any rule, regulation, notification, direction or order made thereunder. The Reserve Bank also reserves the right to revoke the authorisation of any of the offices for infringement of any s....