No absolute ban on P Notes: Chidambaram

No absolute ban on P Notes: Chidambaram


New Delhi: Union Finance Minister P.Chidambaram has made it clear that India has not imposed a total ban the issue of participatory notes (PNs) by foreign institutional investors.

In October, the Securities and Exchange Board of India (Sebi) banned foreign funds from issuing the notes through sub-accounts, and in cases where they are based on Indian derivatives instruments.

The move was designed to help stem large inflows, which have pushed the rupee up against the dollar and fuelled liquidity.

“There is no absolute ban on PNs. Foreign investors can still register and trade Indian shares," Chidambaram informed the parliament. He said about 1,157 foreign funds are registered with Indian authorities and they have pumped $68 billion (Rs268,141 crore) into Indian shares and debt so far.

A massive $16 billion of that has arrived this year, prompting the central bank to actively intervene and issue bonds to soak up extra cash from the banking system.

Rupee touched near-decade high last month and has appreciated about 12% this year.