Project Office Setup: Prior RBI Nod for Citizens of 6 Nations
Current · Source: Reserve Bank of India · RBI/2011-12/392 · issued 09 Feb 2012 · ~2 min read
Quick answerRBI clarifies that general permission for foreign entities to set up project offices in India does not override the prior approval requirement for citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, or China under FEMA 22/2000.
The rule, in the simplest words
If a person is a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, or China, they cannot set up a project office (a temporary office for a big building or factory project) in India without first getting a special 'yes' from RBI (the central bank).
Even if a foreign company meets the easy rules (general permission) for opening a project office, the rule above still applies—so banks must check the nationality of the owners and bosses.
Banks must stop or send to RBI any project office request from a company owned or controlled by a citizen of those six countries, unless RBI has already given its special approval.
Banks should update their checklists and train their staff to always look for these nationality rules when handling project office applications.
How it plays out — a real example
A forex & trade-finance officer in Indore receives a project office application from a construction company whose main owner is a citizen of Bangladesh. The officer remembers the RBI rule: even though the company meets the general permission conditions, she cannot process it. She rejects the application and tells the customer they must first get prior approval from RBI before she can help them.
What changed
RBI issued a clarification that the general permission for project offices (from 2003 guidelines) remains subject to Regulation 4 of FEMA 22/2000. This means citizens of six specified countries still need prior RBI approval, even if general permission conditions are met.
What it means for you
Banks must ensure that any project office application from entities linked to citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, or China is not processed under general permission. Such cases require a separate prior approval from RBI, adding a compliance layer for lenders handling these applications.
What you must do
Verify the nationality of all beneficial owners and key personnel for project office applications.
Reject or escalate any project office setup request from entities owned/controlled by citizens of the six specified countries without prior RBI approval.
Update internal FEMA compliance checklists to explicitly flag these nationality restrictions.
Train relationship managers and compliance teams on this circular's implications for project office processing.
Who it affects
AD Category-I banks handling project office applications, Foreign entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, or China, Compliance departments of all authorized dealer banks
❓ Common questions
Does this circular apply to liaison or branch offices as well?
Yes, the circular references Regulation 4 of FEMA 22/2000, which covers branch, liaison, project offices, and any other place of business for citizens of the six specified countries.
What should a bank do if a project office application is received from a Chinese entity?
The bank must not process it under general permission. It must inform the entity that prior RBI approval is mandatory and guide them to apply separately to RBI.
Does this circular change any existing general permission conditions?
No, it only clarifies that the general permission is subject to the nationality restrictions in FEMA 22/2000. The conditions from the 2003 circular remain unchanged for other entities.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/392
A.P. (DIR Series) Circular No. 76
February 09, 2012
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Clarification - Establishment of Project Offices in India by
Foreign Entities – General Permission
Attention of the Authorised Dealer Category - I (AD Category - I) banks is invited to Regulation 4 of Notification No.FEMA 22 /2000-RB dated May 3, 2000 , viz., Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, as amended from time to time, in terms of which, no person, being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, shall establish in India, a branch office or a liaison office or a project office or any other place of business by whatever name called, without the prior permission of the Reserve Bank. Attention of the AD Category -I banks is also invited to the A.P. (DIR Series) Circular No. 37 dated November 15, 2003 which provides the guidelines regarding general permission to a foreign entity for setting up a Project office in India, subject to certain conditions.
2. It is clarified that the general permission accorded in terms of the November 15, 2003 guidelines is subject to the adherence to the provisions of Regulation 4 of Notification No.FEMA 22/2000-RB dated 3rd May 2000, ibid, alongwith their specified conditions.
3. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions /approvals, if any, required under any other law.
Yours faithfully,
(Meena Hemchandra)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/392 · issued 09 Feb 2012. The plain-English explanation above is BankPulse’s own independent summary.
Verify the nationality of all beneficial owners and key personnel for project office applications.
📜 Compliance
Reject or escalate any project office setup request from entities owned/controlled by citizens of the six specified countries without prior RBI approval.
Update internal FEMA compliance checklists to explicitly flag these nationality restrictions.
Train relationship managers and compliance teams on this circular's implications for project office processing.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (AD Category-I banks handling project office applications, Foreign entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, or China, Compliance departments of all authorized dealer banks), your first concrete step on “Project Office Setup: Prior RBI Nod for Citizens of 6 Nations” is: “Verify the nationality of all beneficial owners and key personnel for project office applications.” (RBI issued this 09 Feb 2012).
Circular: RBI/2011-12/392 -- Project Office Setup: Prior RBI Nod for Citizens of 6 Nations
Issued: 09 Feb 2012
Action required: Verify the nationality of all beneficial owners and key personnel for project office applications.
Action required: Reject or escalate any project office setup request from entities owned/controlled by citizens of the six specified countries without prior RBI approval.
Action required: Update internal FEMA compliance checklists to explicitly flag these nationality restrictions.
Action required: Train relationship managers and compliance teams on this circular's implications for project office processing.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6997&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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