Busy season ahead for Goa's money changers

With Goa gearing up for the oncoming tourist season, along with the travel and hotel industry, the money changing market worth around Rs 1,500 crore is also gearing up for the busy season ahead.

The Reserve Bank of India is deliberating upon raising the net worth for single branch operation of money changing to Rs 25 lakh and for more than one branch operations to Rs 50 lakh.

The full-fledged money changers (FFMC's who are allowed both to buy and sell currency) have to compete against increased parallel market and competition from banks, but their numbers have in fact swelled compared with last year.

With a lot of new entrants streaming in, it clearly outlines a better growth prospect this year. The market expects to grow at a healthy 12 per cent rate this year.

Said a source from RBI, Goa, "In the money changing space, we have three kind of operators- one, authorised banks such as the State Bank of India (SBI), second, FFMCs such as Thomas Cook and such others, and lastly the restricted money changers (RMCs) who are allowed to buy currency but not allowed to sell.''

"In recent times, the first two categories have seen growth, whereas the share of RMCs has gone down. The liberalisation of money changing business saw a sharp rise in the number of money changers, but stiff competition has brought some sanity to the market. Though Goa has more number of money changers than any other place, the recent growth in numbers is actually good for competition as the RBI policy now is attracting big players,'' she said.

Among the new entrants in the field in the state are Travelex, Travelmate-a subsidiary of Kuoni, Bank of Punjab and WallStreet Interchange. These are in direct competition with established players such as Thomas Cook, Bureau de change-Erudite, Forex Dealers private Ltd, TT Forex Ltd, Cox & Kings, LKP Forex, UAE Exchange and Financial Services Ltd and banks such as ICICI Bank which are opening specialised forex exchange outlets.

While an increase in minimum capital base for money changers raised from Rs 10 lakh to Rs 25 lakh in 1999 pushed out minor players, the increase from Rs 25 lakh to Rs 50 lakh, however, has made the competition tougher.