Navratna PSUs get automatic route for oil sector investments abroad
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2006-2007/403 · issued 18 May 2007 · ~2 min read
Quick answerRBI now allows Navratna PSUs to invest in unincorporated oil sector entities abroad under the automatic route, removing the prior approval requirement. AD Category-I banks must verify approval from the competent authority and a certified Board Resolution before processing remittances.
What changed
Previously, all investments by Indian parties in unincorporated oil sector entities abroad required prior RBI approval. Now, Navratna PSUs can invest under the automatic route, provided the proposal is approved by the appropriate competent authority (Board of Directors, ECS, or CCEA) and supported by a certified Board Resolution.
What it means for you
This liberalization simplifies the process for Navratna PSUs, reducing regulatory hurdles for overseas oil exploration investments. AD banks must ensure compliance with the approval hierarchy and reporting requirements, but no longer need to seek RBI's prior nod for each remittance.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Verify that the investing entity is a Navratna PSU as per Department of Public Enterprises classification.
Confirm the proposal has been approved by the appropriate competent authority (Board, ECS, or CCEA) based on the investment amount.
Obtain and retain a certified copy of the Board Resolution approving the investment.
Process remittances under the automatic route and ensure adherence to usual reporting requirements.
Who it affects
AD Category-I banks, Navratna Public Sector Undertakings (PSUs), Indian parties investing in oil sector abroad
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 16:48 IST
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the automatic route for Navratna PSUs?
It means Navratna PSUs no longer need prior RBI approval for investing in unincorporated oil sector entities abroad. They can remit funds after getting approval from their Board or higher authorities (ECS/CCEA) and submitting a certified Board Resolution to their AD bank.
Which competent authority approves the investment?
Approval depends on the amount: the PSU's Board of Directors for smaller amounts, the Empowered Committee of Secretaries (ECS) for larger ones, and the Cabinet Committee on Economic Affairs (CCEA) for the highest thresholds.
What documentation must AD banks check?
AD banks must ensure the entity is a Navratna PSU, the proposal has approval from the correct competent authority, and a certified copy of the Board Resolution is provided. Standard reporting requirements also apply.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/403
A. P. (DIR Series) Circular No. 59
May 18, 2007
To,
All Category - I Authorised Dealer Banks
Madam / Sir,
Investment by Navaratna Public Sector Undertakings (PSUs) in unincorporated entities in oil sector abroad
Authorised Dealer Category - I (AD Category - I) banks are aware that investment in the oil sector (i.e. for exploration and drilling for oil and natural gas, etc.) in an unincorporated entity overseas by an Indian party requires prior approval of the Reserve Bank.
2. Such proposals of Navratna PSUs (status given by the Department of Public Enterprises, Ministry of Heavy Industries and Public Enterprises, Government of India) are cleared by the competent authority, depending on the amount involved, viz. by (1) Board of Directors of the respective PSU, (2) Empowered Committee of the Secretaries (ECS), and (3) Cabinet Committee on Economic Affairs (CCEA).
3. In view of the existing controls in place, it has now been decided to further liberalise and simplify the procedures and to allow Navaratna PSUs to invest in unincorporated entities in oil sector abroad, under the automatic route. Accordingly, AD Category - I banks may allow the remittances by Navaratna PSUs towards investment in the oil sector (i.e. for exploration and drilling for oil and natural gas, etc.) in an unincorporated entity overseas after ensuring that the proposal has been approved by the appropriate competent authority, as stated above and is duly supported by a certified copy of the Board Resolution approving such investment. The investments would be subject to the usual reporting requirements.
4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
5. The directions contained in this Circular have been issued under Section 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/403 · issued 18 May 2007. The plain-English explanation above is BankPulse’s own independent summary.
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BankPulse Compliance Evidence Pack — generated 05 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=3527&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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