In terms of Section 10 (1) of FEMA 1999, RBI may authorize Full Fledged Money Changers (FFMCs)/non-bank Authorised Dealers (ADs) Category-II to deal in foreign exchange as an authorised dealer, money changer, or off-shore banking unit or in any other manner as it deems fit.
In terms of extant instructions, these authorized dealers 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 the build-up of idle balances as permitted in FED Master Direction No.3/2015-16 dated January 01, 2016 (updated from time to time) on Money Changing Activities.
RBI on Monday (May 27, 2024) directed that from July 1, 2024, the 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, every quarter. Data on such sales and purchases should be maintained and made available for audit/inspection. FFMCs/ADs selling foreign currency may also ascertain the ‘sale to public’ requirement of buying FFMCs/non-bank ADs Category II, by seeking relevant data from such entities.
“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,” said RBI.
