Master Direction - Money Changing Activities (Updated May 06, 2026)

This Master Direction consolidates the Reserve Bank of India’s instructions on money changing activities. It explains who may undertake money changing, the scope of the Direction, where to find underlying circulars, and the key operational and compliance areas that Full-Fledged Money Changers (FFMCs), non-bank AD Category-II and other authorised persons must follow. The document has been updated multiple times, most recently on May 06, 2026.

What this document is about

• The Master Direction is issued under Sections 10(4) and 11(1) of FEMA, 1999 and consolidates RBI instructions on money changing activities.
• It applies to entities authorised by RBI to undertake money changing business (FFMCs, non-bank AD Category-II, and other authorised persons) and sets out operational, KYC/AML/CFT and reporting expectations.
• The Direction is to be read along with the list of underlying circulars and the separate Master Direction on reporting under FEMA, which provide further procedural detail.

Key requirements and changes

• Only entities authorised by RBI may carry on money changing business. Undertaking such business without RBI authorisation attracts penalties under FEMA.
• The Master Direction consolidates rules on functioning of FFMCs, activities of non-bank AD Category-II, appointment of agents/franchisees and conduct of foreign exchange transactions with customers.
• RBI will continue to issue A.P. (DIR Series) Circulars when changes are required; the Master Direction will be amended simultaneously to reflect such changes.

Practical actions for money changers

1. Check licence and authorisation status: Ensure your entity holds valid RBI authorisation before undertaking money changing. If you are operating without an RBI licence, stop operations and regularise immediately to avoid penalties.
2. Follow the consolidated directions: Familiarise branch managers and front-line staff with Sections V (Operational Instructions) and VI (KYC/AML/CFT Guidelines) referenced in the Master Direction. These sections contain the operational and compliance rules you must apply when dealing with customers.
3. Use the Appendix and underlying circulars: Refer to the Appendix for the list of underlying notifications/circulars that form the basis of this Master Direction. Where more detail is needed (eg. application forms, reporting formats), consult those specific circulars and the Master Direction on Reporting under FEMA.
4. Apply and report via APConnect where required: For licencing or branch/agent approvals (as described in the document and earlier guidance), use the APConnect portal and submit required documents to the appropriate RBI Regional Office (as previously specified in the Direction). Keep copies of submissions and acknowledgement receipts.
5. Maintain KYC/AML/CFT frameworks: Ensure your internal KYC, AML and CFT policies are in place, up-to-date with RBI guidance, and implemented before commencing or continuing operations. Train staff on customer identification, transaction monitoring, record-keeping and suspicious transaction reporting.
6. Appointment of agents/franchisees: If appointing agents or franchisees, follow the Master Direction’s guidelines for such appointments (refer to Section III and related circulars). Ensure franchisees operate within the restricted scope permitted and that appropriate oversight, training and controls are in place.
7. Monitor RBI communications: RBI will periodically issue A.P. (DIR Series) Circulars that may amend the Master Direction. Subscribe to or monitor RBI releases and amend internal procedures promptly when instructions change.
8. Reporting obligations: Continue to meet reporting obligations under FEMA and the separate Master Direction on Reporting. Maintain accurate books and file required returns on time.

Notes and references

• The Master Direction is without prejudice to permissions required under other laws (eg. Companies Act, Shops & Establishment rules, local licences). Ensure compliance with all applicable laws.
• Where the Master Direction references specific operational or licensing criteria found in earlier or underlying circulars (for example, application documentation, net-owned funds criteria, start-up timelines), consult those circulars or the RBI Regional Office for the exact procedural requirements applicable to your case.

Action summary: Verify your RBI authorisation, keep KYC/AML/CFT systems current, follow operational instructions in Sections V and VI, use APConnect for applications where required, monitor RBI updates, and ensure timely reporting under FEMA.