Sebi may extend PN winding down deadline: FM

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Speaking at the ICICI Securities Investor Meet  in New York, Finance Minister P Chidambaram said that there is more than usual interest in the India growth story.

 

India can also become a provider of financial services, he stated. He also expressed his intention to make Mumbai an international financial hub. The outlook for the Indian economy is extremely positive and domestic consumption is driving economic growth. The inflow of foreign funds is an area of concern.

 

Chidambaram said that the government has no intention to ban P-notes but they intend to slow down the flow of funds. The exchange rate is outside the comfort zone and the situation is new to India.  

Commenting on the P-notes issue, the FM said that the Sebi P-notes draft is an 'informed decision'. Only 26 to 33 FIIs deal via P-notes in India and only some FIIs are above the 40% P-notes limit. An overwhelming number of FIIs do not deal in P-notes. He added that Sebi may extend the18-month period on P-notes winding down and those who want to invest in P-notes can register as FIIs. Sebi has been in consultation with FIIs for the last 10 days prior to the P-notes move. Sebi will give a fair hearing before taking a decision on P-notes, said Chidambaram. He stated that the government will ask Sebi to find ways to make the FII registration simpler. The final Sebi decision on P-notes will clear all confusion. The measures taken were unavoidable and the government has full faith in markets, he added.

Liquidity from developed economies is spilling to India, said Chidambaram at the meet. The pace of the market rise leaves one uncomfortable and the government has to keep the exchange rate at competitive levels. They will take other measures in the long-term to moderate capital inflows. No more steps to control capital flows are under contemplation.

He added that the movement of BSE and NSE over the last one-year is comparable to most EMs . India is the second fastest growing economy in the world and needs a well-regulated capital market, he stated.  

According to him, India is amongst the best-regulated markets in the world. The India growth story is broad-based. Policy and practice must address concerns of investors, Chidambaram added.

The FM commented that he had no intention to control capital flows, though it is necessary to moderate flows into India. The government has taken measures to moderate flow of funds and will facilitate more capital outflows. They are confident of achieving goals and will wipe out poverty.

According to the FM, India will be fourth largest economy in some years.

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