August 2, 2023
In a significant development, the Reserve Bank of India (RBI) has levied late submission fees totaling ₹2,000 crore on four prominent state-run energy majors for the delayed reporting of their overseas investments. The four public sector undertakings (PSUs) facing fines are ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd, GAIL (India) Ltd, and Oil India Ltd.
The move by RBI comes as a result of the late submission of investment evidence by these PSUs. The regulatory body has taken a stern stance on enforcing compliance with Foreign Exchange Management (Overseas Investment) Regulations, 2022, which mandate timely reporting of overseas direct investments (ODIs) by authorized dealer (AD) banks such as State Bank of India (SBI) for these PSUs.
According to sources familiar with the matter, the hefty fines may have a substantial impact on the overseas work commitments of these state-run energy majors. Consequently, the four firms are making efforts to secure an extension from RBI to avoid disruptions in their operations and ensure the smooth functioning of their overseas subsidiaries.
The oil ministry, which serves as the nodal ministry for these PSUs, contends that the responsibility for reporting these transactions lies with the AD bank, SBI, and not with the PSUs themselves.
A senior executive from Indian Oil Corp. asserted that they have sought time from RBI to reconcile the late submission fee and ensure compliance with the regulations. However, the RBI’s restrictions on further remittances or financial commitments toward foreign entities remain in place until the reporting delay is regularized.
Officials from the concerned ministries, as well as spokespeople for OVL, Indian Oil, GAIL, and RBI, have not responded to media queries regarding the matter.
The total investment made by state-owned companies in oil and gas assets abroad currently amounts to approximately $36.55 billion, spanning 55 assets across 25 countries. With such significant investments at stake, ensuring timely and accurate reporting is crucial to avoid regulatory scrutiny and penalties.
Officials from OVL have emphasized that they are in compliance with all applicable RBI guidelines regarding remittances for their overseas projects, and they do not anticipate any significant fees due to delayed reporting.
Likewise, representatives from Oil India have assured that they are adhering to all RBI guidelines for remittances related to their overseas projects.
The imposition of these substantial fines serves as a stern reminder to companies operating in India to diligently follow reporting guidelines and ensure timely communication with the RBI. It also highlights the crucial role of authorized dealer banks in facilitating transparent and accurate reporting of overseas investments on behalf of PSUs and other entities.
As the situation unfolds, stakeholders are closely monitoring developments to assess the impact on the affected energy majors’ operations and their ability to meet overseas commitments in a timely manner. Efforts to resolve the issue are ongoing, with both the PSUs and RBI working to find a resolution that will safeguard the interests of all parties involved.
