India has no intention of banning participatory notes (P-notes) overnight, said Revenue Secretary Shaktikanta Das.

However, Indian authorities may look to improve the know-your-client (KYC) norms around P-Notes in the wake of the Supreme Court appointed Special Investigation Team (SIT) asking SEBI to tighten norms relating to investments into India via participatory notes.

“The government will not do anything to undermine the growth momentum of the economy. It’s nobody's intention to ban P-Notes overnight,” Das said. The government will take a call on this after consulting regulators and stakeholders including market players and financial institutions, he said here at an Assocham meeting.

Das said consultations are on with the Securities and Exchange Board of India and the Reserve Bank of India.

P-Notes are instruments issued by registered foreign institutional investors to overseas investors who wish to invest in the Indian stock markets without registering themselves with SEBI. This instrument allows foreign investors to trade in the Indian capital markets without disclosing their identity to the authorities. Since 2009, P-Notes have accounted for about 15 per cent of the total FII investments. They used to be much higher, at 25-40 per cent, in 2008. During the 2007 bull run, they had exceeded 50 per cent.

GST rates On another note, India is yet to firm up tax rates under the proposed dual goods and services tax (GST) system, he said. “All discussions around GST rates being 25 or 27 per cent should not be there. As of now, no decision has been taken,” Das said.

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