Mumbai, June 3: The Reserve Bank of India (RBI) today relaxed investment rules for companies that plan to acquire energy and natural resource assets abroad.

Domestic companies will now be allowed to invest more than 400 per cent of their net worth as on the date of the last audited balance sheet.

So far, domestic entities were allowed to make direct investment in joint ventures and/or wholly owned subsidiaries outside India up to 400 per cent of the net worth as on the date of the last audited balance sheet, under the automatic route.

However, the RBI said investments in excess of 400 per cent of the net worth shall be made only with the prior approval of the central bank. The relaxation has been designed to provide greater flexibility to Indian companies for investments abroad in the energy and natural resources sector such as oil, gas, coal and mineral ores.

Industry sources said the RBI circular would benefit entities such as Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd which have made significant investments overseas.

“The RBI relaxation is being done to encourage Indian companies to go overseas and thereby add more energy assets. This is a positive for companies such as ONGC,” an industry source said. ONGC subsidiary ONGC Videsh has firmed up joint ventures with various overseas entities in oil and gas exploration.

In the annual policy statement for 2008-09, the RBI had said it would allow Indian companies to invest overseas in energy and natural resources sectors in excess of the existing limits with its prior approval.

The RBI also said that navaratna public sector undertakings were allowed to invest in overseas unincorporated entities in oil sector (for exploration and drilling for oil and natural gas) without any limits under the automatic route.

This facility, it added, has now been extended to ONGC Videsh Ltd and Oil India Ltd.