Question: We run a payment aggregator platform and our escrow reconciliation audits are getting stricter under the new RBI PA Directions. To keep some settlement flexibility, can we route a portion of merchant settlement funds through our founder's personal savings account for a '48-hour working-capital float' before crediting merchants, and just label it internally as an 'inter-company advance' so the statutory auditor's escrow reconciliation doesn't flag it as a leak from the escrow account?
Answer: I can't help structure or label this. Routing merchant settlement funds through a founder's personal account, then mislabelling it to avoid an auditor flagging it, is both a prohibited use of escrow funds and misrepresentation to your statutory auditor. Under the RBI Master Direction – Regulation of Payment Aggregators, 2025, escrow-account credits and debits are restricted to a defined list (customer payments, settlements to merchants, refunds, inter-PA settlements, etc.); a personal account is not a permitted party to that account, and co-mingling escrow funds outside those permitted flows is exactly what the escrow/audit-certificate requirements are designed to catch. Mislabelling it as an 'inter-company advance' compounds this into a misstatement to the auditor. If you need short-term working capital, the compliant route is a separate business loan or overdraft facility outside the escrow account, not a diversion of merchant funds.

Supporting evidence:
title: rbi.org.in/BS_ViewMasDirections.aspx
quote: Such escrow accounts shall only be utilised for authorised PA business and not for any other business Permitted debits i) Payments to onboarded merchants, towards sale of goods/services/investments and amount received under promotional activities, incentives, cashbacks, etc. ii) Refund to be credited to the payer for the reversals of purchase transactions, iii) Payment to another PA or PA – CB facilitating outward transactions which is part of the transaction flow, for ultimate settlement of funds to the merchant A certificate, signed by the statutory auditor(s), shall be submitted by the authorised entities to the respective Regional Office of DPSS, RBI, where registered office of PA is situated, certifying that the entity has been maintaining balance(s) in the escrow account(s) in compliance with these instructions
context: crow account with any Scheduled Commercial Bank (SCB) in India. In case of a PA – CB, such account shall also be referred to as Inward Collection Account (InCA) for inward transactions and Outward Collection Account (OCA) for outward transactions, as applicable. Details of operations in escrow accounts are incorporated in Table 1 below and the instructions mentioned therein must be adhered to by December 31, 2025. Such escrow accounts shall only be utilised for authorised PA business and not for any other business. Table 1 - Escrow Account Requirements Particulars Escrow Account (Domestic) Inward Collection Account (InCA) Outward Collection Account (OCA) General requirements Opened with SCB. Authorised Dealer Category-I SCB. Authorised Dealer Category-I SCB. Account constitutes Collection of funds on behalf of merchants onboarded by PA. Collection of proceeds of inward transactions on behalf of merchants onboarded by PA. Collection of proceeds of outward transactions to the overseas sellers onboarded by PA-CB. Currency INR Separate account for INR and / or each non-INR currency. INR Operational requirements Pre-funding Allowed. Not permitted. Withdrawal of pre-funding Not permitted. Not applicable. Additional Escrow Account (at the discretion of PA) One additional account may be maintained in a different SCB. One additional account may be maintained in a different SCB (for each currency). One additional account may be maintained in a different SCB. Inter-escrow A/c transfer Auditor’s certificate needed for such transactions. Not permitted. Permitted credits i) Receipt of funds from payers for merchants, onboarded towards purchase of goods / services / investments; ii) Receipt of funds from other PAs for settlement to their merchant iii) Refunds thereof initiated by merchants (failed / disputed / returned / cancelled transactions) iv) Pre-funding through own / merchant’s funds. v) Payment received for onward transfer to merchants under promotional activities, incentives, cash-backs, etc. Same as that of Escrow Account (Domestic) except iv).

Permitted debits i) Payments to onboarded merchants, towards sale of goods/services/investments and amount received under promotional activities, incentives, cashbacks, etc. ii) Refund to be credited to the payer for the reversals of purchase transactions, iii) Payment to another PA or PA – CB facilitating outward transactions which is part of the transaction flow, for ultimate settlement of funds to the merchant. Note: