Starting a foreign currency exchange business in India requires more than an office, investment and customers. The business must operate through a legally permitted route and follow the Reserve Bank of India’s requirements. Entrepreneurs should understand the activities they can offer, the financial conditions that apply and the responsibilities involved in handling customers’ money.

An FFMC licence has traditionally been associated with buying and selling foreign currency for permitted purposes. However, the rules changed in 2026. RBI no longer considers fresh FFMC applications, except applications already under process when the Foreign Exchange Management (Authorised Persons) Regulations, 2026 came into force. Therefore, anyone planning to enter this sector must first understand how these changes affect the proposed business.

In this article, CA Manish Mishra talks about How to Obtain an FFMC Licence from RBI.

What Is an FFMC Licence?

FFMC stands for Full Fledged Money Changer. An FFMC is a money changer authorised by RBI under the Foreign Exchange Management Act, 1999. Its permitted activities include purchasing foreign currency notes and travellers’ cheques and selling them for foreign travel purposes. It may also function as an agent under the Money Transfer Service Scheme, subject to the requirements of that scheme.

For example, an international tourist visiting India may exchange foreign currency for Indian rupees through an authorised money changer. Similarly, an Indian resident travelling overseas may purchase foreign currency for the journey. The money changer must examine the transaction, complete the required customer checks and maintain proper records. An FFMC authorisation does not provide unrestricted permission to undertake banking, overseas investment or every kind of international payment. The business must operate within its permitted activities and the conditions attached to its authorisation.

Can a Business Obtain a New FFMC Licence in 2026?

The first point a new applicant must understand is that the earlier fresh FFMC application route is no longer available. Under the 2026 regulations, RBI does not consider new FFMC applications, apart from those already under process when the regulations took effect. This means that incorporating a company and arranging funds does not allow a new business to apply through the old procedure.

A business should establish the available regulatory route before spending money on premises, application documents or professional services. A new entrant can examine the Forex Correspondent model, which involves working as an agent of an Authorised Dealer Category-I or Category-II. This arrangement has its own appointment process, operating conditions and responsibilities. It should be assessed according to the services the business intends to provide.

Why Older FFMC Application Guides Can Be Misleading

Older FFMC guides commonly describe company incorporation, minimum funds, document preparation and submission of an application to RBI. These guides may explain the earlier procedure correctly but may not reflect the changes introduced in 2026. Following an outdated checklist can lead to unnecessary expenditure. For example, an entrepreneur may arrange office space and prepare an application without first checking whether RBI can consider it.

The business may then discover that the selected application route is unavailable. A current assessment should begin by identifying whether the business is a new entrant, an existing FFMC, an eligible pending applicant or a proposed buyer of an existing FFMC company. Each situation requires a different approach.

Documents for Eligible Pending FFMC Applications

A company with an eligible pending application should review the documents already submitted and any additional information requested by RBI. The purpose of this review is to ensure that the application is complete, consistent and supported by reliable records.

Incorporation and Constitutional Documents

The Certificate of Incorporation establishes the company’s legal identity. The Memorandum and Articles of Association explain its objects and internal governance. For an eligible pending FFMC application, the constitutional documents should contain the necessary provision for undertaking money changing business.

The company should check that its name, registered office and other details agree across the application and supporting documents. Where an amendment has been made, the relevant records should clearly establish the change.

Financial Statements and Auditor’s Certificate

Financial statements help establish the company’s financial position. The transitional documentation includes the latest audited accounts and a certificate from the statutory auditors confirming Net Owned Funds as required for the application. Audited financial statements for the previous three years are relevant wherever applicable.

The figures in the auditor’s certificate should reconcile with the supporting financial records. A company should not assume that its bank balance alone establishes compliance with the required financial conditions. The applicable calculation and deductions must be examined properly.

Banker’s Confidential Report

The banker’s confidential report forms part of the prescribed transitional documentation. It provides information relevant to the applicant’s banking relationship and financial conduct.

The company should coordinate with its bank early and follow the required submission procedure. Delays in arranging third-party documents can affect the preparation of a complete response to regulatory queries.

Declarations and Director Information

Relevant declarations address proceedings, investigations and criminal cases involving the company or its directors. Director-related information supports the assessment of suitability and integrity.

These declarations should be prepared after checking the actual position. Incomplete disclosures or inconsistent statements can create concerns during scrutiny. Any matter requiring explanation should be reviewed carefully before a response is submitted.

Board Resolution and Associated Concerns

A certified board resolution records the company’s decision to undertake money changing business. It should also clearly identify the person authorised to act for the company where relevant.

Information about sister or associated concerns operating in the financial sector helps explain the wider business structure. The company should maintain clear ownership and group records so that relationships between entities can be understood.

Procedure for an Eligible Pending FFMC Application

An eligible pending applicant should approach the process through a careful review of its existing file. The immediate priority is to establish the application’s status, identify outstanding requirements and respond accurately.

Step 1: Confirm the Application’s Status

The company should locate the original application acknowledgement, reference number and correspondence received from RBI. These records help establish when the application was submitted and how it was being processed.

Submission of an application does not authorise the company to begin money changing business. The applicant must wait for the required approval and fulfil the applicable conditions before commencing operations.

Step 2: Review Outstanding RBI Queries

Every query should be recorded and assigned to the person responsible for preparing the response. The company should identify the documents needed, the submission deadline and any explanation required.

A response should directly address the observation raised. Sending unrelated documents or repeating the original application may leave the issue unresolved. Clear explanations and properly labelled attachments make the submission easier to review.

Step 3: Reconcile Corporate and Financial Information

The applicant should compare the information in its application with its current corporate and financial records. Changes in directors, ownership, addresses or financial position should be identified and assessed.

For example, a change in directors may require updated information and declarations. Similarly, a financial certificate should be supported by records that use a consistent reporting date and calculation basis.

Step 4: Prepare Operating Systems

The applicant should plan how the business will verify customers, approve transactions, record currency movements and reconcile balances. It should also decide how employees will report unusual transactions or operational problems.

A written policy should explain the actual work employees need to perform. Staff should understand which documents to check, when further information is required and who can approve or decline a transaction.

Step 5: Review Approval Conditions Before Starting

If authorisation is granted, the company should examine every condition attached to it. Management should convert those conditions into specific actions and assign responsibility for completion.

The company should confirm that its premises, staff, systems, records and reporting arrangements are ready before launch. A documented readiness review can help identify gaps before customer transactions begin.

Forex Correspondent Route for New Businesses

The Forex Correspondent model allows an appointed entity to undertake permitted activities through an agency relationship with an Authorised Dealer Category-I or Category-II. The principal assesses the proposed correspondent and sets requirements through its approved policy.

For a new business, this route requires both regulatory understanding and commercial preparation. The proposed services, location, customer base, management capability and operational arrangements should be explained clearly to a potential principal.

Identify the Intended Customers

The business should begin by understanding who will use its services. A location serving international tourists may have different requirements from one serving residents travelling abroad.

A realistic demand assessment should consider customer numbers, seasonal changes, competition and likely transaction values. These factors help determine whether the proposed operation can support its continuing expenses.

Prepare a Business Profile

A business profile should explain the ownership structure, management background, proposed locations and intended services. It should also describe the systems available for customer checks, transaction recording and complaints handling.

A clear profile helps the potential principal understand the proposal. It also helps the entrepreneur identify areas that need further preparation before entering discussions.

Understand the Principal’s Requirements

The principal may establish conditions relating to due diligence, financial capacity, technology, transaction reporting, customer service and controls. The proposed correspondent should obtain and understand these requirements before agreeing to the arrangement.

The business should assess whether it can meet the conditions consistently. Appointment should be supported by operating capacity, rather than an assumption that the principal will handle every responsibility.

Examine the Commercial Agreement

The agreement should be reviewed for permitted services, charges, settlement arrangements, reporting duties, audit access and termination conditions. The business should understand how income will be calculated and which expenses it must bear.

A financial forecast should include staffing, rent, security, systems and compliance costs. This helps establish whether the arrangement remains practical at realistic transaction volumes.

Buying an Existing FFMC Company

Acquiring an existing FFMC company requires detailed legal, financial and regulatory due diligence. The buyer should examine the authorisation, its conditions, ownership records, regulatory correspondence and the company’s compliance history. The review should also cover financial statements, taxes, customer complaints, audit findings and unresolved liabilities. A licence copy alone does not establish that the company has met all its obligations.

The 2026 regulations require prior RBI approval before specified changes in management, control or ownership of more than 50%. A proposed acquisition should therefore be structured around the approvals applicable to the transaction. The purchase agreement should clearly address approval conditions and responsibility for historical liabilities.

Post-Authorisation Compliance for FFMCs

An FFMC must maintain effective controls throughout its operations. Compliance involves daily transaction checks, reliable accounting, timely reporting and management oversight.

Customer Verification and Transaction Review

Customer checks help establish identity and understand the purpose of the transaction. Employees should examine the documents and declarations relevant to the service being provided.

Where information is incomplete or inconsistent, the transaction should be reviewed before proceeding. Staff should have a clear process for referring concerns to the appropriate person.

Records and Currency Reconciliation

Transaction records should clearly show currency purchases, sales, payments and balances. Physical currency should be reconciled with the books, and differences should be investigated promptly.

For a business operating from several locations, each location’s records should be properly maintained. Transfers between branches should also be accounted for correctly so that they do not distort business figures.

Reporting and Audit

The monthly consolidated statement in Form FLM 8 is generally required by the tenth day of the following month, subject to the applicable reporting exception. The annual audited balance sheet and statutory auditor’s net-worth certificate are due by 31 October, while the annual forex-turnover certificate is due by 30 April.

Concurrent audit requirements also apply. Management should review audit observations, correct deficiencies and retain evidence of corrective action. A compliance calendar can help employees track reporting periods, deadlines and review responsibilities.

Financial and Business Requirements

Existing FFMCs must review the minimum net-worth requirements applicable to them. The 2026 regulations specify ₹25 lakh for a single-branch FFMC and ₹50 lakh for a multiple-branch FFMC for renewal.

The regulations also introduce a minimum annual forex-turnover requirement of ₹10 crore for FFMCs, to be achieved within the prescribed transition period and maintained thereafter. Business planning should account for these continuing conditions.

Cost and Financial Planning

The cost of running a money changing business includes premises, employees, security, technology, accounting, audit and working capital. These expenses should be budgeted separately from funds needed to satisfy applicable financial requirements.

A conservative forecast should consider quieter periods, settlement timing and unexpected costs. The business should also maintain sufficient resources to continue meeting its obligations when income is lower than expected. Professional charges, operating expenses and regulatory financial requirements serve different purposes. Understanding this distinction helps entrepreneurs assess the actual funding needed.

Conclusion

Understanding the current RBI rules is the first step towards entering the foreign currency exchange sector. Fresh FFMC applications are no longer considered, apart from the specified transitional category, so new entrants should assess the available alternatives before committing funds.

Eligible pending applicants should focus on their application status, documentation and regulatory responses. Existing FFMCs should review their continuing financial, operational and reporting obligations. Careful preparation helps the business select a lawful route and establish the systems needed for reliable day-to-day operations.

Frequently Asked Questions (FAQ’s)

Q1. What is the full form of FFMC?

Ans. FFMC stands for Full Fledged Money Changer. It is an entity authorised by RBI to undertake specified foreign currency exchange activities, subject to applicable rules and the conditions of its authorisation.

Q2. Can I apply for a fresh FFMC licence in 2026?

Ans. Under the Foreign Exchange Management (Authorised Persons) Regulations, 2026, RBI does not consider fresh FFMC applications. The exception covers applications already under process when these regulations came into force.

Q3. What option is available for a new money changing business?

Ans. A new entrant can explore appointment as a Forex Correspondent of an Authorised Dealer Category-I or Category-II. The principal evaluates the applicant under its approved policy before permitting operations.

Q4. What activities can an existing FFMC undertake?

Ans. An FFMC can purchase foreign currency notes and travellers’ cheques and sell them for foreign travel purposes. It can also function as an agent under the Money Transfer Service Scheme, subject to that scheme’s requirements and the conditions of its authorisation.

Q5. What is the minimum net worth required for FFMC renewal?

Ans. The minimum net worth for renewal is ₹25 lakh for a single-branch FFMC and ₹50 lakh for a multiple-branch FFMC. These are financial eligibility requirements, rather than fees payable to RBI.

Q6. Is there a minimum annual forex turnover requirement?

Ans. Yes. The 2026 regulations prescribe minimum annual forex turnover of ₹10 crore for an FFMC. It must achieve this within two years from the regulations coming into force or commencement of forex business, whichever is later, and maintain it thereafter.

Q7. What documents are required for an eligible pending FFMC application?

Ans. The prescribed documents include the Certificate of Incorporation, Memorandum and Articles of Association, audited financial statements, statutory auditor’s Net Owned Funds certificate, banker’s confidential report, relevant declarations and a certified board resolution. RBI may seek further information while examining the application.

Q8. Can an FFMC begin operations immediately after submitting its application?

Ans. No. Submitting an application does not permit money changing activities. The company must obtain authorisation and meet the applicable conditions before starting operations. A newly authorised non-bank entity must commence operations within six months of authorisation and inform the concerned RBI regional office.

Q9. Does an FFMC authorisation require renewal?

Ans. Existing authorisations with an expiry date require attention to the transition rules. An application for renewal must be made at least two months before expiry. Authorisations granted under the 2026 regulations remain valid until revoked or surrendered, subject to continuing compliance.

Q10. Can I purchase an existing FFMC company?

Ans. An acquisition can be considered after examining the company’s authorisation, financial position, compliance history and liabilities. Prior RBI approval is required before a change in management or control, or an ownership change exceeding 50%. Purchasing the company does not remove its existing obligations.