RBI liberalises Money Changing Facilities
Press Release 2001-02/793, dated 12-1-2002, issued
by the Press Relations Division, RBI
Resident
entities wishing to undertake restricted money changing would no longer be
required to obtain licence from the Reserve Bank of India. Under the new scheme
announced by the Reserve Bank Authorised Dealers (ADs) and Full Fledged Money
Changers (FFMCs) have been accorded the freedom to enter into
agency/franchising agreements for the purposes of carrying on the business of
conversion of foreign currency notes, coins or travellers cheques into rupees.
ADs and FFMCs desirous of entering into such business arrangements would only
be required to obtain a one-time approval from the Reserve Bank. Details of the
new scheme are available on the FEMA RBI Website www.rbi.org.in. The names and
locations of the existing Restricted Money Changers will be made available on
the RBI website. Names and addresses of those who would henceforth operate
under the new scheme would also be made available on the RBI website.
Scheme for Authorised Dealers and Full Fledged Money Changers AppointingAgents/Franchisees for Undertaking Restricted Money Changing
The objective of
the Scheme is to provide easier conversion facilities for travellers and
tourists, including NRIs, by enlarging the network of money changing facilities
in the country. It is expected that the new facility, given below, will enable
banks and full fledged money changers to provide such facilities at all tourist
centres and major cities for extended hours and on holidays.
At present, the
conversion of currency notes, coins or travellers’ cheques designated in
foreign currency into Indian rupees is possible through Banks designated as
Authorised Dealers (ADs) as also through two other channels viz., (a) Full
Fledged Money Changers (FFMCs) and (b) Restricted Money Changers (RMCs). While
FFMCs are allowed to, both, buy and sell foreign exchange against Indian
rupees, the RMCs can only buy foreign exchange against Indian rupees. At
present all the above entities require authorisation from the Reserve Bank to
undertake the money changing business.
Under the proposed
scheme, in addition to the existing facilities, RBI would freely permit Banks
i.e., ADs and FFMCs to enter into agency/franchising agreements at their option
with entities for the purposes of carrying on Restricted Money Changing
business i.e., conversion of foreign currency notes, coins or travellers’
cheques into rupees.
Franchisee
A franchisee can
be any entity who has a place of business and whose bona fides are acceptable
to the AD/FFMC. These franchisees would undertake only restricted money
changing business.
Franchisers are
free to decide on the tenor of the arrangement as also the commission or fee
through mutual agreement with the franchisee.
The
Agency/Franchise agreement to be entered into by an AD/FFMC should, however,
include the following salient features :
a. The display of
exchange rates by the franchisee. Exchange Rate of foreign currency into rupees
should be the same or close to the daily exchange rate charged by the AD/FFMC
at its branches.
b. The surrender of
collections by the franchisee to the franchiser or other authorised persons, as
may be agreed upon, within 7 days.
c. The maintenance of proper record of transactions by the
franchisee.
d. The on-site
inspection of premises and records of the franchisee by the franchiser at least
once a year.
The Franchiser
i.e., an AD or an FFMC would need to apply to the Reserve Bank in the enclosed
format for putting in place arrangements under this Scheme. The application
should be accompanied by a declaration that while selecting the franchisees
adequate due diligence has been carried out and that such entities have
undertaken to comply with all the provisions of the franchising
agreement/prevailing RBI regulations regarding money changing. Approvals would
be issued by the Reserve Bank on a one time basis. Thereafter, as and when new
agency/franchise agreements are entered into, these would have to be reported
to the Reserve Bank on a post facto
basis along with similar declaration as indicated above.
Existing RMCs
who are licensed by the Reserve Bank are free to undertake money changing under
this scheme as a franchisee of an AD/FFMC on surrendering the existing RBI
licence. Those who do not opt for operation under this Scheme may continue to
undertake existing money changing business until further notice.
Franchisers are
free to select centres for operationalising the Scheme.
Franchisers
would be expected to impart training to the agents/franchisees as regards
operations and maintenance of records. Reserve Bank would also be willing to
provide the required support for organising such training, subject to mutual
convenience.
The franchisers
i.e., ADs/FFMCs would be expected to put in place adequate arrangements for
reporting of transactions by the franchisees to ADs/FFMCs in a simple format to
be prescribed by them on a regular basis, say at monthly intervals.
As mentioned
above, a system of inspection of the books of franchisees should be put in
place. The purpose of such inspection, which should be done at least once a
year would be to ensure that the money changing business is being carried out
by the franchisees in conformity with the terms of agreement/prevailing RBI
guidelines and that necessary records are being maintained by the franchisees.