Money-chang­ing: A new al­ter­na­tive

In the sec­ond of its se­ries of work­shops on Money-Chang­ing Busi­ness, the Fed­er­a­tion of In­dian Ex­port Or­gan­i­sa­tions (FIEO) re­cently un­veiled the present rules & reg­u­la­tions and op­por­tu­ni­ties for travel agents to en­ter this field. The work­shop was con­ducted

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Ve­davalli high­lighted sev­eral ini­tia­tives taken by the Re­serve Bank of In­dia, for fa­cil­i­ta­tion of au­tho­rised mon­ey­chang­ing busi­ness across the coun­try and es­pe­cially in the Tier-II and Tier-III towns.

RBI, on an ap­pli­ca­tion, may au­tho­rise any per­son known as Au­tho­rised Per­son (AP) to deal in For­eign Ex­change un­der Sec­tion 10 (1) of FEMA 1999. How­ever, the au­tho­ri­sa­tion shall be sub­ject to con­di­tions (Sec­tion 10(2)), as spec­i­fied by the RBI. APs will have to ad­here to the di­rec­tions is­sued by RBI un­der Sec­tion 10(4) and Sec­tion 11(1) of the FEMA, 1999. Non-com­pli­ance shall at­tract re­vo­ca­tion of li­cence and pe­nal pro­vi­sions of Sec­tion 10(3) (b) and 11(3) of the Act.

The ap­pli­cant has to be a com­pany reg­is­tered un­der the Com­pa­nies Act, 1956. The min­i­mum Net Owned Funds (NOF) re­quired for con­sid­er­a­tion as FFMC are ` 25 lakh for sin­gle branch FFMC and ` 50 lakh for mul­ti­ple branch FFMC.

“The el­i­gi­bil­ity cri­te­ria pri­mar­ily de­pend on strong fi­nan­cials, good gov­er­nance, regu- la­tory/pru­den­tial com­fort and ad­e­quate in­ter­nal con­trol mech­a­nism. The cri­te­ria for upgra­da­tion of ex­ist­ing FFMCs to AD-Cat­e­gory II in­clude min­i­mum net owned funds of Rs. 10 crore, sat­is­fac­tory func­tion- ing as FFMC for at least two years and sat­is­fac­tory credit re­port from their bankers,” Ve­davalli pointed out.

Ve­davalli high­lighted that fresh li­cences will be is­sued on a se­lec­tive ba­sis to those who com­ply with all the li­cenc­ing re­quire­ments, fa­cil­i­tate an in­crease in out­reach, have lo­ca­tional ad­van­tage like be­ing sit­u­ated in bor­der ar­eas and tourist cen­tres.

Af­ter ob­tain­ing li­cences, au­tho­rised money-chang­ers should have a copy of the reg­is­tra­tion un­der Shops & Estt Act or any other doc­u­men­tary ev­i­dence such as rent re­ceipt and copy of lease agree­ment to be sub­mit­ted to the re­gional of­fice be­fore com­mence­ment of busi­ness. Com­mence­ment of op­er­a­tions should be within a pe­riod of six months from the date of is­suance of li­cence.

More­over, a copy of the lat­est au­dited ac­counts, a cer­tifi­cate from the Statu­tory Au­di­tors re­gard­ing the net owned fund (NOF) as on the date of ap­pli­ca­tion, a dec­la­ra­tion to the ef­fect that no pro­ceed­ings have been ini­ti­ated by any law en­forc­ing au­thor­i­ties against the ap­pli­cant com­pany and its di­rec­tors and a copy of the KYC/AML/CFT pol­icy frame­work ex­ist­ing in the com­pany have to be sub­mit­ted be­fore RBI. How­ever, the Re­serve Bank re­serves the right to re­voke the li­cence granted to an AMC at any time if it is sat­is­fied that it is in pub­lic in­ter­est to do so. The li­cences can also be can­celled if the AMC has failed to com­ply with any con­di­tion of au­tho­ri­sa­tion or has con­tra­vened any of the pro­vi­sions of the FEMA or any rule, reg­u­la­tion, no­ti­fi­ca­tion, di­rec­tion or or­der made there un­der.

The Re­serve Bank also re­serves the right to re­voke the au­tho­ri­sa­tion of any of the of­fices for in­fringe­ment of any statu­tory or reg­u­la­tory pro­vi­sion. The Re­serve Bank may also re­voke any of the ex ist­ing con­di­tions of a money changer’s li­cence or im­pose new con­di­tions.

She also said that un­der­tak­ing money-chang­ing busi­ness or ad­ver­tis­ing about car- ry­ing on money-chang­ing busi­ness with­out a valid li­cence from RBI shall be in con­tra­ven­tion to the pro­vi­sions of the Act and the people in­volved are li­able to be pe­nalised.

M Ve­davalli For­mer GM Re­serve Bank of In­dia The Re­serve Bank may also re­voke any of the ex­ist­ing con­di­tions of a money changer’s li­cence or im­pose new con­di­tions

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