Govt. hints at no change in P-Notes norms

Thursday, Dec 3, 2015,12:01 IST By metrovaartha A A A

New Delhi | Government Thursday said the current regulatory framework on Participatory Notes (P-Notes) is strict and robust, hinting that there may not be any change required in the rules at the moment. The comments assume significance as a Supreme Court appointed Special Investigation Team (SIT) on black money had in July asked capital markets regulator Sebi to review its regulations on P-Notes and identify their end-users.

As of now, the kind of reporting requirement and the kind of vigor with which we follow through… on the identity of P-Notes holders is actually fairly good and strict in terms of really understanding who is it and whether they are legitimate institutions that are transacting through P-Notes, Minister of State for Finance Jayant Sinha said. He added that capital markets regulator Sebi has over the years strengthened the KYC norms associated with P-Notes. Overall, the framework is quite robust, Sinha added. In its report, SIT had raised its concerns over possible manipulation of the popular offshore instrument for money laundering.

Finance Minister Arun Jaitley had in July said the government is mindful of the impact on foreign investment in case of any action against P-Notes.

P-Notes are issued by foreign portfolio investors registered with Sebi to other overseas investors who want to take a position in the Indian markets without any direct registration for trading in Indian markets. These instruments are popular as they provide a low-cost and easier route for investing in the Indian markets.