NRI Real Estate and Property Investment in India
 |  WWW.NRIREALTYNEWS.COM
 
RBI suggests restrictions on P-notes
Thursday, October 25, 2007

Maintaining its stance on participatory notes (P-notes), the Reserve Bank of India (RBI) has sent in a note to the finance ministry on the eve of the Securities and Exchange Board of Indiaís (Sebiís) board meeting to decide on restrictions for P-notes. The central bank has suggested a complete ban on P-notes.

If that is not possible immediately, RBI has suggested two key conditions for issuance of P-notes by FIIs. The RBI nominee on the Sebi board is expected to broach the topic and talk about stringent conditions, the RBI thinks should apply for participatory notes (P-notes) issued even by registered foreign institutional investors (FIIs). The first is putting a limit to PN-routed investments in sensitive sectors such as real estate india and financial services. The second is making a lock-in period mandatory for liquidating investments made under P-notes.

The lock-in period could contain speculative behaviour and the recommendation is based on the second report of the Tarapore committee on capital account convertibility, according to sources. One of the possibilities being considered is the capping of P-note investments in sectors which have an upper limit on foreign investment -- both foreign direct investment and FII.

It is expected that Sebi may explain the basis for its recommendation that FIIs with 40 per cent of assets under custody will not be allowed to issue fresh p-notes.

Sources say that the government is convinced that inflows from genuine investors will not take a dip even as some categories of instruments are banned or the Indian markets are made intimidating for the foreign investors. Investors will choose other routes like the non-deliverable forward market or the overnight interest rate swap market abroad. The government feels the urgency to address the long-term issue of accessibility of the Indian markets through more instruments.

Related Readings

»RBI up in arms against automatic FDI in realty
»RBI Steps In to Check Rupee
»RBI permits Overseas Remittance upto USD 100,000

Add to your Social Bookmarks:
ADD TO DEL.ICIO.US ADD TO DIGG ADD TO FURL ADD TO NEWSVINE ADD TO NETSCAPE ADD TO REDDIT ADD TO STUMBLEUPON
ADD TO TECHNORATI FAVORITES ADD TO SQUIDOO ADD TO WINDOWS LIVE ADD TO YAHOO MYWEB ADD TO ASK ADD TO GOOGLE  

 

 

Return to India

NRI INSURANCE

NRI SERVICES

 

Indian Cities Guide

DELHI   NOIDA   GHAZIABAD
         
GURGAON   MUMBAI   AHMEDABAD
         
KOLKATA   CHENNAI   HYDERABAD
         
BANGALORE   PUNE   CHANDIGARH
         
..More cities »
NRI Communities in Different Countries  
Indian Embassies & Consulates in Different Countries
 
NRI Newsletters  
NRI Feeds - Syndications