All the Individuals or Business Entities who want to deal in Foreign Currencies need to obtain FFMC License from the Apex Bank, i.e., RBI. Such a license gives the holders the authority to purchase foreign exchange from NRIs (Non-Resident Indians) and sell the same for business and travel purposes to the Indians visiting abroad.
Based on the provisions and stipulations of Section 10 of the FEMA 1999, it shall be noted that only an AMC (Authorised Money Changer) is eligible to deal in the activities concerning Money Changing and Foreign Exchange.
Some of the firms and hotels have also been provided Full Fledged Money Changer License by the RBI to deal in Foreign Currency, Traveller’s Cheques, and Coins. The same is done to avoid the difficulties faced by foreign tourists and visitors.
Role of Authorised Money Changers in Forex Transactions
Authorized Money Changers play a pivotal role in the transactions concerning Foreign Exchange. The Reserve Bank of India grants approval to the banks in the form of Licenses to deal in activities of foreign exchanges. The said license is granted to only those banks which are well equipped to carry out foreign exchange transactions in India.
Also, it shall be noted that other than banks, certain financial institutions are granted authorization by the apex bank to undertake prescribed types of foreign exchange transactions that are incidental to their main business.
Benefits of FFMC License
An AMC License Holder has the Capability to provide sale facilities and services for foreign exchange;
FFMC license holders can offer encashment certificates in case of the Traveller’s Cheques, Foreign Currency Notes from the Non Residents and Residents;
An FFMC License Holder can undertake foreign exchange activities for the foreign tourists visiting India;
An AMC License Holder is able to address dealings in coins, travelers’ cheques, and foreign currency, at the prevailing exchange rate;