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
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