The Hindu Business Line : Draft norms for money changers

Mumbai, Sept. 26 The Reserve Bank of India on Friday announced draft guidelines for licensing and other approvals for full-fledged money changers (FFMCs) to improve access to foreign exchange facilities by residents and tourists and to ensure efficient customer service through competition.

According to guidelines, a FFMC should be a company registered under the Companies Act, 1956. A single branch FFMC should have minimum net-owned funds of Rs 25 lakh and a multiple branch should have net owned funds of Rs 50 lakh. RBI also permitted Authorised Dealer (AD) Category-I, AD Category-II and FFMCs to enter into agency or franchisee agreements at their option for the purpose of carrying on restricted money changing business, i.e. conversion of foreign currency notes, coins or travellers’ cheques into rupees.

A franchisee can be any entity that has a place of business and minimum net-owned funds of Rs 10 lakh, RBI said.

RBI has also asked for monthly reporting of transactions by the franchisees and regular spot audits of all locations at least one in six months by the franchisers, i.e. the AD Category-I, AD Category-II and FFMCs.

Such spot audits should involve a dedicated team and ‘mystery customer’ concept should be used to test the compliance level of the franchisees.

“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 RBI guidelines and that necessary records are being maintained by the franchisees,” RBI said.

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