The Reserve Bank of India (RBI) issued Circular No. RBI/2024-25/39 A.P. (DIR Series) Circular No. 08 on May 27, 2024, directed to all Authorized Persons in Foreign Exchange, addressing instructions on money changing activities. This circular serves as a reminder of the guidelines outlined in FED Master Direction No.3/2015-16 dated January 01, 2016, which governs money changing activities and has been updated periodically.
According to existing instructions, Full Fledged Money Changers (FFMCs) and non-bank Authorized Dealers (ADs) Category-II are permitted to source their regular business requirements of foreign currency notes from other FFMCs and ADs within India. Additionally, they are mandated to maintain balances in foreign currencies at reasonable levels to prevent the accumulation of idle balances, ensuring efficient utilization of resources.
Effective from July 1, 2024, the circular introduces a new requirement stipulating that the value of foreign currency notes sold by FFMCs/non-bank ADs Category-II to the public for authorized purposes must not be less than 75% of the value of foreign currency notes purchased from other FFMCs/ADs on a quarterly basis. FFMCs/ADs are obligated to maintain records of such sales and purchases and must make this data available for audit and inspection purposes. Moreover, FFMCs/ADs selling foreign currency are expected to verify compliance with the ‘sale to public’ requirement of the purchasing FFMCs/non-bank ADs Category II by requesting relevant data from these entities.
Furthermore, the circular mandates FFMCs/non-bank ADs Category-II to submit their annual audited balance sheet to the respective Regional Office of the Reserve Bank, along with a certificate from their statutory auditors regarding the Net Owned Funds (NOF) as of the balance sheet date, no later than October 31 of the relevant year. This requirement aims to enhance transparency and regulatory oversight in the money changing sector, ensuring compliance with financial soundness standards.
Reserve Bank of India
RBI/2024-25/39
A.P. (DIR Series) Circular No. 08
May 27, 2024
To
All Authorised Persons in Foreign Exchange
Madam/ Sir
Instructions on Money Changing Activities
Attention is invited to FED Master Direction No.3/2015-16 dated January 01, 2016 (updated from time to time) on Money Changing Activities.
2. In terms of extant instructions, Full Fledged Money Changers (FFMCs)/non-bank Authorised Dealers (ADs) Category-II may obtain their normal business requirements of foreign currency notes from other FFMCs and Authorised Dealers (ADs) in India. Further, they are also required to keep balances in foreign currencies at reasonable levels to avoid build-up of idle balances.
3. In this regard, it has been decided that from July 1, 2024, value of foreign currency notes sold by FFMCs / non-bank ADs Category -II to the public for permitted purposes should not be less than 75% of the value of foreign currency notes purchased from other FFMCs/ ADs, on a quarterly basis. Data of such sale and purchase should be maintained and made available for audit / inspection. FFMCs/ADs selling foreign currency may also ascertain the ‘sale to public’ requirement of the buying FFMCs/non-bank ADs Category II, by seeking relevant data from such entities.
4. Further, it has also been decided that FFMCs/non-bank ADs Category-II shall submit their annual audited balance sheet to the concerned Regional Office of the Reserve Bank along with a certificate from their statutory auditors regarding the NOF as on the date of the balance sheet, latest by October 31 of the year concerned.
5. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.
6. The aforesaid FED Master Direction No.3 is being updated to reflect these changes.
Yours faithfully,
(N Senthil Kumar)
General Manager
