One project’s balance is not unrestricted funding for another
Under RBI’s specified project-office facility, a foreign company’s Project Office in India may maintain non-interest-bearing foreign-currency accounts for its Indian projects, subject to the stated conditions. Each project has only one such account. Project-related expenditure, permitted credit sources, closure on completion and prior RBI permission for inter-project transfers are distinct controls; an aggregate bank surplus does not override them.
Current framework and eligibility
Checked on 24 October 2026 against Deposits and Accounts Master Direction paragraph 3.7, updated 2 September 2026 and Foreign Currency Accounts Regulations, regulation 4(G)(3). The underlying office must have the requisite general or specific RBI permission and the concerned Project Sanctioning Authority’s approval. The sanctioned contract must specifically provide for foreign-currency payment.
The regulation’s reference to one or more accounts must be read with the Master Direction’s project-level restriction. More than one project can explain more than one account; it does not create permission for several foreign-currency accounts for one project. Keep evidence of the actual project-to-account mapping rather than relying only on a company-wide account list.
Classify incoming and outgoing amounts by the permitted category
The Master Direction identifies foreign-currency receipts from the Project Sanctioning Authority and remittances from the parent or group company abroad or a bilateral/multilateral international financing agency. It identifies project-related expenditure as the debit purpose. Establish the legal source and actual project allocation of each transaction; a foreign-currency label or bank acceptance alone does not establish eligibility.
Do not route an unrelated loan or another project’s collection through the account merely because it improves the cash forecast. Costs shared across projects need a supported allocation. The project-office facility is different from an Indian exporter’s overseas account, an Indian agent’s principal-expense account or an EEFC account; their separate rules should not be mixed.
Inter-project movement requires the specified prior permission
Paragraph 3.7 allows inter-project transfers with prior permission of the RBI Regional Office having jurisdiction over the project office. An internal finance approval is not that permission. Maintain the request, permission and actual transfer trail where applicable; do not show a proposed transfer as available project cash before the required authority is established.
A pooled management dashboard can still be useful, but it should display each project’s unrestricted eligible funding position, commitments and proposed permission-dependent transfers separately. A group total can hide a project shortfall. Keep both the overall currency reconciliation and the regulatory project boundaries visible.
Completion changes the account-control task
The account should be closed at project completion under the Master Direction. Build completion and bank-closure steps into the project plan rather than leaving an empty or residual account indefinitely. Determine the proper handling of remaining liabilities, documentation and residual funds with the authorised dealer under the applicable requirements. Closure is not itself unrestricted authority to remit or repurpose every balance.
Where a dispute arises between the Project Office and the Project Sanctioning Authority or another Government or non-Government agency, paragraph 3.7(8) requires the account balance to be converted into INR and credited to a special account, to be dealt with according to settlement of the dispute. Record this separately from routine project completion and closure, and coordinate the conversion and special account with the authorised dealer.
Keep statements, approvals, source documents, expense allocations, project-completion evidence and closure correspondence in one file. Non-interest-bearing status should also be reflected in the cash budget; do not build an assumed investment yield into this account facility. The illustrations below demonstrate control arithmetic and do not authorise any transaction lacking the specified permissions.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: Two projects can explain two separate accounts
Assume an eligible Project Office executes two separately identified qualifying projects and each uses one foreign-currency account. There are two projects and two mapped accounts, one per project. The office-level total of two accounts does not alone establish non-compliance; validate every other condition.
Illustrative example 2: A second account for the same project changes the result
Assume Project A is mapped to two foreign-currency accounts while Project B has one. Total accounts are three, but Project A has two against the stated one-per-project restriction. A company-wide ratio of three accounts to two projects cannot cure the project-level issue.
Illustrative example 3: Separate an unsupported credit source
A proposed credit schedule contains USD 25,000 from the parent abroad, USD 30,000 from the Project Sanctioning Authority and USD 10,000 of an unrelated receipt not established within the facility. Total proposed credits are USD 65,000; only USD 55,000 is established within the stated categories on these facts. Resolve the USD 10,000 separately before relying on it.
Illustrative example 4: Allocate mixed expenses on evidence
A USD 25,000 expenditure schedule contains USD 18,000 supported as the account’s project-related expenditure and USD 7,000 belonging to another activity without established permission under this account. Do not treat the full USD 25,000 as validated debits. Retain the USD 18,000/7,000 split and resolve the other amount.
Illustrative example 5: Reconcile one project’s eligible balance
Assume eligible opening funds USD 50,000, qualifying receipts USD 20,000 and properly supported project payments USD 45,000. Closing project balance is USD 25,000. Reconcile it to the bank and remaining project obligations; the arithmetic does not establish authority for other uses.
Illustrative example 6: A group surplus does not remove a project’s funding gap
Project A has USD 30,000 and Project B USD 10,000, giving combined funds USD 40,000. Project B needs USD 20,000 for supported payments, a USD 10,000 gap. A proposed USD 10,000 transfer from A must satisfy the prior RBI permission requirement; the combined surplus is not permission.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm the Project Office’s establishment basis | General/specific permission and office records. |
| 2 | Verify project approval and currency-payment clause | Sanction and signed contract. |
| 3 | Map each foreign-currency account to one project | Account/project register. |
| 4 | Verify non-interest-bearing account terms | Bank opening and terms evidence. |
| 5 | Classify credits by permitted source | Authority, parent/group or financing-agency records. |
| 6 | Validate project-related debits | Invoices and expenditure approvals. |
| 7 | Allocate shared costs transparently | Project-wise allocation support. |
| 8 | Review proposed inter-project transfers before execution | Prior RBI Regional Office permission where applicable. |
| 9 | Reconcile project balances and commitments | Currency ledger, bank and funding forecast. |
| 10 | Close the account on project completion | Completion evidence and bank closure/settlement record; for disputes under paragraph 3.7(8), INR-conversion and special-account records. |
Sixteen practitioner FAQs
1. Does the facility cover an Indian exporter’s overseas account?
No. This article concerns a foreign company’s Project Office accounts in India.
2. Is a foreign-currency invoice alone sufficient?
No. Establish the office, project approvals and contract conditions.
3. Can an office with several projects have more than one account overall?
The framework allows accounts for projects, with the stated one-account-per-project restriction.
4. Can one project use several such accounts merely for convenience?
The Master Direction states each project has only one foreign-currency account.
5. Are the accounts interest-bearing?
The specified facility is non-interest-bearing.
6. Are parent remittances an identified credit category?
Yes, subject to the actual framework and supporting evidence.
7. Can an unrelated receipt automatically be routed through?
No. Establish its legal category and permission separately.
8. What is the stated debit purpose?
Payment of project-related expenditure.
9. Can a shared cost be charged without allocation?
Retain a supported project allocation and resolve any other-activity component.
10. Does internal approval suffice for an inter-project transfer?
No. The stated rule calls for prior permission of the relevant RBI Regional Office.
11. Can the group’s cash total prove project-level funding availability?
No. Show the project boundary and any permission-dependent transfer separately.
12. When should closure be addressed?
At project completion, with the applicable bank settlement and documentary process. For disputes covered by paragraph 3.7(8), apply its INR-conversion and special-account requirement, with the balance dealt with according to the dispute settlement.
13. Does closure automatically permit every outward remittance?
No. Resolve remaining liabilities and the applicable residual-funds requirements.
14. Can exporter-account or EEFC rules be imported into this facility?
No. Analyse the actual account category.
15. What should a cash forecast exclude until resolved?
Unsupported credits, debits or transfers lacking required evidence or permission.
16. What makes the closing file reviewable?
Project and office approvals, account mapping, source/debit records, transfer permissions and completion/closure evidence.
Conclusion
Maintain project-level cash and permissions even when management uses a pooled dashboard. The account mapping, permitted transactions and completion evidence should remain individually traceable.