Chennai: The Reserve Bank of India cancelled 201 licences for full-fledged money changers (FFMC) in Chennai, including units of big names like American Express, GR Thangamaligai Jewellery and Sterling Holiday Financial Services, according to data on the website as of December 18, 2015. The recent move, however, will not limit the choices for Chennaiites as forex options are available at nearly every bank branch.
This brings down the number of money changers, like tour operators, hotels, brokers, who convert foreign currencies, coins or travelers' cheques into Indian rupees, to 159 in Chennai as of February 17. Currently, the entities who still provide foreign exchange in Chennai include Coramandel & Financial Services Pvt Ltd, Parry Enterprises India Ltd, Southerland Forex & Services Pvt Ltd, SRM Hotel Pvt Ltd, Essel VKC Forex and Swaroski Securities Ltd.
FFMC licences were issued by RBI to widen access of foreign exchange facilities for Indians, foreigners, and NRIs at all major tourist destinations, metros and those on holidays.
While RBI officials were tight-lipped about the reasons for the cancellations, it is learnt that the apex bank regularly carries out this weeding operation to root out FFMCs, that have been inactive or delayed commencing operations or violated some RBI rules like improper book keeping and mismatch in conversion rates. "We could cancel their licenses for a number of reasons — one could be that they haven't maintained the minimum balance they are expected to maintain," says a senior RBI official.
For issuance of FFMC licences, the applicants have to be registered under the Companies Act and have minimum net-owned funds of 25 lakh if they want to open a single branch or have 50 lakh for multiple branch operations. A tour operator who earlier had a licence, said, "Banks have started offering forex options at nearly every branch. This led to a dip in business to tour operators. It is not viable for tours operators to have a large reserve of cash idle to maintain a single branch license as we get only five to 10 transactions in a month."