Govt to discuss SIT recommendations on P-notes with Sebi, RBI

Amid fears of negative impact of Special Investigative Team's (SIT) recommendation of stricter norms for participatory notes (P-Notes) on markets, the government on Monday said a view on the suggestions will be taken only after consultations with the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and others.

P-Notes are instruments issued by registered foreign institutional investors (FIIs) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator.

Supreme Court-appointed SIT on black money had last week recommended a host of measures, including suggesting Sebi to tighten norms related to P-Notes investments into India.

"These are the recommendations given by SIT. We will take views after consultation with stakeholders including Sebi, RBI and related institution. Government will take a considered decision, there is no decision so far," Revenue Secretary Shaktikanta Das said in the national capital on Monday.

Das said the government will go through the SIT recommendations internally and there will not be a delay.

"The report is not going to be put in cold storage, we are going to take a view in few months. It is a complex matter and it will take few months to decide on it," he said.

SIT had suggested that the market regulator put in place regulations to help identify individuals holding P-Notes, or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.

A similar recommendation made in 2007 had triggered a major collapse in the stock market, prompting the then Finance Minister P Chidambaram to announce that no such measures would be taken by the government.

Seeking to calm the jittery markets, Das said there should be no uncertainty in market as presently status quo prevails.

"SIT has considered various view points and government will study them and take a view on them. After stakeholder consultation, a view would be taken. There is no need for markets to react in any particular manner," he said.

Spooked by a global fall in equities and concerns over suggested regulation on P-Notes, stock markets plunged in early session with the benchmark Sensex dropping by over 280 points or 1 per cent.