Business Daily from THE HINDU group of publications
Wednesday, Nov 25, 2009
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Business Daily from THE HINDU group of publications Wednesday, Nov 25, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Foreign Institutional Investors Markets - Investments Web Extras - Stock Markets Our Bureau New Delhi, Nov. 24 A Lok Sabha member on Tuesday demanded the need to put a tight lid on ‘Participatory Notes’ as the derivative instruments increasingly used by foreign institutional investors to take positions in the country’s bourses cause frequent equity market gyrations. Raising the matter during Zero Hour, Mr Bhartruhari Mahtab, BJD member, sought a check on stock market transactions through PNs, stating the ‘dirty money” was coming into the bourses through the backdoor. Stating that 52 per cent of net inflow of foreign funds into the stock market was being routed through PNs and that they were originating from offshore tax havens, Mr Mahtab said Mauritius, Hong Kong, China and Luxembourg alone accounted for Rs 25,000 crore of FII flows into India. He said there was “a surge” in FII inflows through PNs in the last two months which is “a matter of concern”. While such foreign funds get zero to 1 per cent in return in the US and Europe, such offshore derivative instruments enter into the country through the backdoor in higher amounts, even as foreign direct investment through the front has declined, he said. Mr Mahtab said countries such as Brazil, Taiwan and South Korea have taken measures to check the inflow of such funds with Brazil even slapping a two per cent levy on capital inflows in order to preclude such funds from destabilising the domestic markets. He said “without registering with the Securities and Exchange Board of India” the sources of such funds and the identity of persons of such funds remain unknown. Sharp rise in P-Notes value in May P-Notes on the rise with market surge, say experts More Stories on : Foreign Institutional Investors | Investments | Stock Markets
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