RBI fines 4 PSUs for late reporting of overseas investments
The move may impact the overseas work commitments of these four state-run energy majors, prompting efforts by them to secure an extension from RBI
The Reserve Bank of India (RBI) has imposed late submission fees (LSF) of ₹2,000 crore on ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd, GAIL (India) Ltd, and Oil India Ltd for delayed reporting of their overseas investments, two people familiar with the development said.
The move may impact the overseas work commitments of these four state-run energy majors, prompting efforts by them to secure an extension from RBI, which has imposed a late submission fee of ₹500 crore each on the four firms.
State Bank of India (SBI) is the authorized dealer (AD) bank for these public sector undertakings’ (PSUs’) foreign transactions. It is the work of the AD bank to report and reconcile their overseas direct investments (ODIs) within the requisite timelines.
The oil ministry, the nodal ministry for these PSUs, believes the responsibility for reporting these transactions lies with SBI, not the PSUs.
“As per RBI notification dated 22 August 2022, restrictions have been placed on further remittance or transfer, wherein authorized dealer bank shall not facilitate any outward remittance/financial commitment by a person residing in India towards a foreign entity until the delay in reporting is regularized,” said a senior Indian Oil Corp. executive, on condition of anonymity. “We have sought time from RBI to avoid any disruption in operations and for the smooth functioning of overseas subsidiaries. Further, we are in the process of reconciliation of the late submission fee along with SBI ODI (overseas direct investment) Cell.”
A second person also said efforts are being made to resolve the issue. “It shall happen soon,” the person said, on condition of anonymity.
According to RBI’s Foreign Exchange Management (Overseas Investment) Regulations, 2022, those failing to submit investment evidence within the stipulated timeframe can do so with a late submission fee. “Late submission fee has been introduced by RBI with retrospective effect vide FEM (OI) Regulation, 2000. Regularization of submission of ODI-related data by the companies to RBI, under a specific Unique Identification Number (UIN) assigned to each project through their AD banks, covers several thousands of ODI remittances processed since 2000. SBI has invariably reported all ODIs, based on documents provided by the remitting entities, to RBI as per applicable guidelines at the material time,” said an SBI spokesperson. Queries emailed to the spokespeople for RBI, ministries of petroleum and natural gas and finance, OVL, Indian Oil , and GAIL remained unanswered.
According to the RBI notification on Foreign Exchange Management (Overseas Investment) Regulations, 2022, “A person resident in India who has made a financial commitment in a foreign entity in accordance with the Act or rules or regulations made there under, shall not make any further financial commitment, whether fund-based or non-fund-based, directly or indirectly, towards such foreign entity or transfer such investment till any delay in reporting is regularized,” the notification added.
The overall investment by state-owned companies in oil and gas assets abroad stands at around $36.55 billion across 55 assets in 25 countries.
“As far as OVL is concerned, we are in compliance with all applicable RBI guidelines regarding remittances for our overseas projects. There are no RBI restrictions on overseas transactions,” said an OVL executive who declined to be named.
“To our information, there is no basis for RBI imposing a total late submission fee of ₹500 crore on OVL due to delayed foreign investments’ reporting. For overseas investments, RBI has gradually moved from manual reporting to online reporting on the RBI portal by the banks. Corporates do not have access to the RBI portal. A reconciliation of past data with the RBI portal was required, which has already been done. OVL has generally complied with the reporting requirements, and no significant fee is expected on this account as far as OVL is concerned,” said a second OVL executive who also declined to be named.
“As far as Oil India is concerned, we are complying with all RBI guidelines remittances for our overseas projects,” said an Oil India Ltd spokesperson.
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Business NewsEconomyRBI fines 4 PSUs for late reporting of overseas investments
First Published:2 Aug 2023, 12:50 AM IST
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