The guidelines for issue of new FFMC licence and renewal of FFMC licence, branch licensing, approval for appointment of agents / franchisees and Know Your Customer (KYC) / Anti Money Laundering (AML) / Combatting the Financing of Terrorism (CFT) Guidelines for Authorised Persons are given below. These guidelines are indicative and the Reserve Bank may take into account other relevant factors like increase in outreach, location, etc. while considering applications for licences.
(i) Entry Norms (i) The applicant has to be a company registered under the Companies Act, 1956. (ii) The minimum Net Owned Funds (NOF) required for consideration as FFMC are as follows: Category Minimum Net Owned Funds Single branch FFMC Rs. 25 lakh. Multiple branch FFMC Rs. 50 lakh.
Note :- The Net Owned Funds of applicants, other than banks, should be calculated as per the following. (a) Owned Funds :- (Paid-up Equity Capital + Free reserves + Credit balance in Profit & Loss A/c) minus (Accumulated balance of loss, Deferred revenue expenditure and Other intangible assets) (b) Net Owned Funds :- Owned funds minus the amount of investments in shares of its subsidiaries, companies in the same group, all (other) non-banking financial companies as also the book value of debentures, bonds, outstanding loans and advances made to and deposits with its subsidiaries and companies in the same group in excess of 10 per cent of the Owned funds.
(ii) Documentation Application in the form, as at Annex - II, should be submitted to the respective Regional Office of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the applicant falls, along with the following documents: (a) Copy each of the Certificate of Incorporation and Certificate of Commencement of Business of the company. (b) Memorandum and Articles of Association containing a provision for undertaking money changing business or an appropriate amendment to this effect filed with the Company Law Board. (c) Copy of the latest audited accounts with a certificate from the Statutory Auditors certifying the Net Owned Funds as on the date of application. Copies of the audited Balance Sheet and Profit & Loss Account of the company for the last three years, wherever applicable. (d) Confidential Report from the applicant's banker in a sealed cover. (e) A declaration to the effect that no proceedings have been initiated by / pending with the Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence (DRI) or any other law enforcing authorities, against the applicant company or its directors and that no criminal cases are initiated / pending against the applicant company or its directors. (f) A declaration to the effect that proper policy framework on KYC / AML / CFT, in accordance with the guidelines issued vide A.P.(DIR Series) Circular No. 17[ A.P.(FL/RL Series) Circular No. 04] dated November 27, 2009, as amended from time to time, will be put in place on obtaining the approval of the Reserve Bank and before commencement of operations.
(g) Details of sister / associated concerns operating in the financial sector, like NBFCs, etc. (h) A certified copy of the board resolution for undertaking money changing business. (iii) Basis for Approval (i) Since several FFMCs are already functioning, fresh licences will be issued on a selective basis to those who comply with all the licencing requirements, who facilitate an increase in outreach, have locational advantage, like being located in border areas, tourist centers, etc. (ii) 'Fit and proper' criteria for the applicant FFMCs # If any case by DoE / DRI or any other case by any other law enforcing authorities, is initiated / pending against any company / its directors, the company will not be considered as 'fit and proper' and its application will not be considered for licencing as FFMC. (# Also applicable to non-bank ADs Category - II) (iii) ‘Fit and proper’ criteria for directors of FFMCs
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