The Hindu Business Line : The P-Notes issue

SEBI’s measures to restrict inflow of unregulated money through the Participatory Notes route are intended for the public market. These measures are, however, merely part of a larger policy move — to regulate the sources of cross-border investments across the spectrum.

Already, one hears murmurs and selective pronouncements calling for regulation of flows through FDI/ FVCI routes in sensitive sectors. This is particularly true of sectors such as real estate, where other regulators, such as the RBI, have held very firm views on who should be allowed to get in.

In terms of impact on M&A activity, therefore, in a short-term scenario, money flows will clearly be impacted with perhaps some corresponding impact. In the long run, however, as our financial markets mature, it is widely expected that more avenues — hitherto not available — will start becoming available for M&A financing.

India is, in any case, poised for the release of large retail and savings moneys into financial markets. Thus, in the long term, these are cleansing steps that will be absorbed by the markets and should not seriously dampen M&A prospects.

Vivek Gupta, New Delhi

Regulating inflows

P-Notes should have been better regulated before they could grow to this size, but SEBI has taken a firm stand now. It should be obvious by now that there are a lot of entities wanting to tap into India’s growth story. Irrespective of the kind of investors they are, it should be mandatory that they get themselves registered before investing. What is the harm in getting registered? SEBI should liberalise the procedure of registration and perhaps come out with a fast-track and streamlined process to help such potential investors.

Aditya H., e-mail

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