What changed
RBI, in consultation with the government, has classified the issue or transfer of 'participating interest/rights' in oil fields to non-residents as FDI under FEMA regulations. Previously, such transactions were not explicitly covered under FDI reporting. Now, transfers must be reported as 'other' in Form FC-TRS, and issuances as 'other' in Form FC-GPR.
What it means for you
Banks must now ensure that any transaction involving participating interest in oil fields with non-residents is reported as FDI, not as a separate category. This brings clarity and uniformity to reporting, reducing ambiguity for AD Category-I banks. It also aligns oil field investments with standard FDI compliance, including 60-day reporting for transfers and 30-day for issuances.
What you must do
- Update internal reporting systems to include 'participating interest/rights' in oil fields under 'other' category in Form FC-TRS and FC-GPR.
- Train staff handling FDI transactions to identify and correctly report these oil field instruments.
- Advise clients involved in oil field investments about the new FDI reporting requirements.
- Monitor all pending and future transactions for compliance with the 60-day (transfer) and 30-day (issuance) timelines.
Who it affects
AD Category-I banks handling FDI reporting, Indian companies in oil and gas sector with non-resident investors, Non-resident investors acquiring participating interest in Indian oil fields
What is 'participating interest/rights' in oil fields?
It refers to a stake or share in the exploration or production rights of an oil field, entitling the holder to a portion of output or revenue.
How should we report a transfer of participating interest to a non-resident?
Report it as 'other' category under Para 7 of Form FC-TRS, within 60 days of the transaction.
Does this circular change the existing reporting timelines?
No, the timelines remain the same: 60 days for transfers and 30 days for issuances, as per earlier regulations.