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 |