NEW DELHI (REUTERS) - India has blocked foreign funding to the local branch of Greenpeace and restricted some activities, a government statement said on Thursday, with New Delhi accusing the environmental group of misusing funds.

Bank accounts of Greenpeace India were frozen as they were found violating financial regulations, the interior ministry said in the statement.

"We have evidence to prove that Greenpeace has been misreporting their funds and using their unaccounted foreign aid to stall crucial development projects," a senior government official, who asked not to be named, told Reuters.

Greenpeace India rejected the restrictions on it as "clear attempts to silence criticism and dissent".

"As an organisation registered to receive foreign funds, we have been and will continue to remain transparent and in compliance of the FCRA," its executive director Samit Aich said in a statement, referring to the law governing foreign contributions.

India's intelligence service said in June last year that Greenpeace and other lobby groups were hurting the country's economy by using foreign funds to campaign against economic projects.

The government has asked the central bank to block foreign fund flows into Greenpeace accounts but a court order in January quashed the move.

In recent months, Greenpeace activists have accused Prime Minister Narendra Modi's government of watering down environmental rules after it allowed industries to operate closer to protected green zones.

"We are being repeatedly targeted because we are protesting against government's unlawful policies," said Divya Raghunandan, Greenpeace India's programme director.

Since coming to power in May last year, Modi has pushed through a series of long-awaited reforms and new policies making it easier for companies to win approval for new projects.