What changed
RBI removed the requirement that machinery transferred between overseas projects must be valued at market value (not less than book value). It now allows AD banks to permit exporters to open multiple foreign currency accounts in any currency with inter-project fund transfers. Exporters can now deploy temporary cash surpluses abroad in short-term instruments (e.g., treasury bills, deposits with AD bank branches) without prior RBI approval.
What it means for you
Indian banks can offer more flexible forex account structures and fund transfer facilities to project/service exporters, reducing compliance burden. Banks must monitor these transactions and ensure reporting requirements are met. This liberalization helps exporters manage cash flows and equipment utilization more efficiently across multiple overseas projects.
What you must do
- Update internal guidelines to allow inter-project machinery transfers without market value recovery, subject to bank monitoring.
- Permit exporters to open and operate multiple foreign currency accounts in any currency with inter-project fund transferability.
- Allow deployment of temporary cash surpluses in short-term paper (rating A-1/AAA or equivalent) or deposits with AD bank branches abroad.
- Ensure monitoring and reporting of all inter-project transfers and cash surplus deployments as per existing PEM requirements.
Who it affects
AD Category-I banks, Project exporters, Service exporters, Exim Bank, Working Group on project exports
Can exporters now transfer machinery between projects without recovering market value?
Yes, the requirement to recover market value (not less than book value) from the transferee project has been withdrawn. Exporters can use machinery for other contracts subject to bank/Exim Bank/Working Group satisfaction.
What are the new rules for foreign currency accounts?
AD banks can permit exporters to open one or more foreign currency accounts in any currency with inter-project transferability of funds across currencies or countries, monitored by the bank/Exim Bank/Working Group.
Can exporters deploy temporary cash surpluses abroad without RBI approval?
Yes, exporters can now deploy temporary cash surpluses in short-term paper (maturity ≤1 year, rating A-1/AAA or equivalent) or deposits with AD bank branches/subsidiaries abroad, subject to bank monitoring.