What changed
Previously, Navratna PSUs, OVL, and OIL could invest in unincorporated entities abroad for oil exploration without limits under automatic route. Now, this facility is extended to incorporated joint ventures and wholly-owned subsidiaries in the oil sector, subject to government approval.
What it means for you
Banks handling these transactions can process investments in incorporated entities without seeking RBI approval for limits, as long as government approval is in place. This simplifies compliance for AD banks and reduces processing time for such overseas investments.
What you must do
- Update internal guidelines to include incorporated JVs/WOS under the automatic route for these entities.
- Verify government approval before processing any investment under this facility.
- Inform constituents about the expanded scope of automatic route investments.
- Ensure all other terms from earlier circulars remain unchanged and are complied with.
Who it affects
AD Category I banks, Navratna PSUs, ONGC Videsh Ltd (OVL), Oil India Ltd (OIL)
Does this circular remove all limits for these investments?
Yes, for Navratna PSUs, OVL, and OIL, investments in incorporated JVs/WOS in the oil sector abroad are allowed without any limits under the automatic route, provided government approval is obtained.
Do AD banks need to report these transactions differently?
No specific new reporting requirements are introduced; existing reporting under FEMA regulations continues. Banks should follow standard procedures for automatic route investments.