Start a FFMC business in India through a small shop
Posted: Jan 15, 2021
If you ever come across a tourist in your shop asking for a change for his dollar, what would you say? Definitely no. But what if, there are many tourists that come often to your shop and ask the same question? You’d still say no but this time you’d feel a business opportunity slipping from your hands.
All of this could’ve been prevent if I had a money exchange business?
We empathize with your thought process. For shops that are situated in tourist heavy locations, it’s almost a sin to not grab the opportunity to start a money changing business. Want to not commit this cardinal sin? Become a full fledged money changer by getting the FFMC License in India.What is a Full-fledged money changer license?
A Full fledged money changer license or the FFMC License is an RBI provided authorization to start a currency exchange business in India. It’s only given after one successfully undertakes the FFMC License procedure. Some of the more interesting facts about FFMC License are as follows:
- There are three types of authorized money changers, and full-fledged money changers are just one part of it.
- Only those with an incorporated company can apply for FFMC License.
- To open a single branch of FFMC, you need to have the minimum net owned fund of INR 25 lakh. If you’re interested in multiple branches, you need to have a minimum net owned fund of INR 50 lakh.
You only choose a business as nuanced as an FFMC if you have a game plan of how to proceed. That’s why, the following points are there to help you obtain the license:
- Vet the locations: Before setting a shop, regardless of how small it is, you need to ensure that the shop is at the right locations. Find an area where you know that tourists are always present. You don’t need to rush the research, just get a proper layout of the area.
- Understand the language of the tourists: Remember, not every tourist is the same. While it’s a common belief that they all speak in English – it can’t be farther from the truth. Also, know that you won’t be the only one active in the area. To make yourself stand apart from the rest, learn languages other than English as well.
- Get an understanding of the market: Depending on the region, you’d receive more tourists from a specific country than the rest. Understand the market of what types of currencies you should always stock on to fulfil the tourist demands.
Once you’re canvassed the region in which you want to open your money changing shop, and have done your due diligence to attract more customers, you can think about the FFMC License. Let me keep the process short for you:
- First, consult with business registration professionals to setup a company for you. The objective of this company would be to exchange currencies.
- Once you’ve established your company, start filling the offline FFMC application.
- Attach the following documents to that application:
a. Certificate of Incorporation of the FFMC company you just registered.
b. The memorandum of Association of that company in which you’ve specified your company’s objective.
c. A confidential report from the bank that specifies your net owned fund.
d. Copy of your audited balance sheet that has all the profit and loss details you’ve incurred that year.
e. A net-owned certificate signed by the Chartered Accountant.
4. Submit the application and document to reserve bank of India.
After due processing, if the Reserve bank considers your application as optimal, you’ll obtain the FFMC License.Conclusion
Once you’ve obtained the FFMC License, you’d be able to conduct a money changing business through your shop at the location you deem suitable. As far as the FFMC License fee is concerned, it’s obviously a bit much. But, you can save money on professional fee, all you need to do is consult with the FFMC License experts.
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Vicky kumar is a company analyst in IP1 License.