What changed
Previously, AD banks needed RBI approval to open foreign currency accounts for Project Offices. Now, ADs can open such accounts and allow intermittent remittances without RBI nod, provided conditions like single account per project, bonafide transaction checks, and auditor certificates are met.
What it means for you
This liberalisation reduces RBI's direct involvement, shifting compliance responsibility to AD banks. Banks must ensure strict adherence to conditions, including 100% concurrent audit scrutiny, to avoid regulatory lapses. It eases project operations for foreign companies, potentially increasing business for AD banks.
What you must do
- Verify Project Office has RBI general/specific approval and project sanction authority clearance before opening foreign currency account.
- Ensure only one non-interest bearing foreign currency account per project, with permitted debits (project expenses) and credits (foreign receipts, parent remittances).
- Conduct 100% concurrent audit scrutiny of these accounts and maintain sole responsibility for compliance.
- For intermittent remittances, obtain auditor certificate on liability provisions and an undertaking that remittance won't affect project completion.
- Submit post-opening report to RBI Regional Office with all prescribed details within stipulated timelines.
Who it affects
Authorised Dealer (AD) banks handling foreign exchange, Foreign companies establishing Project Offices in India, Project Offices operating under general/specific RBI approval
Can we open multiple foreign currency accounts for one Project Office?
No, each project is allowed only one foreign currency account, as per condition (c) of the circular.
What happens if the project completes?
The foreign currency account must be closed upon project completion, as stated in condition (f).
Do we need RBI approval for intermittent remittances?
No, AD banks can permit them without RBI approval, subject to conditions like auditor certificate and undertaking from the Project Office.