152 money changers lose licences in RBI clampdown in Gujarat
Updated: Mar 9th, 2024
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| Money Changers in Gujarat |
Money changers across the state have detested the Reserve Bank of India’s (RBI) move to come down heavily on their units. Out of an estimated 230 money changers in the state, 152 of them were made to surrender their licences.
This clampdown on exchangers providing foreign currency exchange services has created difficulties for foreign travellers willing to exchange currencies.
All five exchangers in Gandhinagar were also made to surrender their licences, leading to a massive shortage in the capital, over which the aspirants were made to travel to Ahmedabad to exchange currencies.
The ripples of this enforcement were also observed in changer operations, which have been drastically affected.
Money changers allege RBI arm-bending
Those failing to comply with the surrender-termination order of their licences have been threatened with action from the Enforcement Directorate (ED) by the RBI’s forex department. Such pressure and threats are made in no other state across the country, allege representatives of the changers.
The RBI website reflects the huge number of stop-activity orders issued.
Money changer firms have to renew their licence every one or two years. During licence renewal, they need to submit a copy of their licence, bank account report, and company directors’ ‘fit and proper’ report, and if the RBI has raised any queries, then a report with details is to be submitted.
However, after September 2022, all the applicants for licence renewals have been forced to surrender their licences.
Money changers affected by this approach allege, “There is no connection between licence renewal and queries raised by renewal authorities. Even if it is submitted by a chartered accountant, it is not considered valid. It is not accepted, even if it is processed through the bank’s accounts.”
“When submitting a PAN card and Aadhar card as proof, they are not accepted. Applicants for licence renewal are required to answer any necessary or unnecessary queries. After providing answers to each query, they are again made to present answers to all 102 queries.” added the firm runners.
LRS reporting hassle
It is also mandated to report under the Liberalised Remittance Scheme (LRS), which allows to remit (send) $2,50,000 per financial year. This reporting notification was issued in 2018 and was directed to be conducted by banks. Letters were written to banks by money changers regarding this in the same year. However, no private or public banks in India responded.
Money changers, however, are being penalised for not starting the reporting in 2018.
Banks have also not provided any confirmation reports for LRS reporting.
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