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Par 100 posts (V.I.P)
THE RESERVE BANK OF INDIA does not lose an opportunity to remind the Finance Ministry that the use of Participatory Notes (PN) in the country’s stock market needs to be curbed. Earlier this month, it wrote a letter to North Block suggesting an urgent need to amend the existing regulations on short – term volatile financial portfolio inflows.
The reason: swelling foreign inflows of Rs 2,20,523 crore of net investment in Indian equities at last count – with over 1,000 registered FIIs in India and 40 per cent of these funds relating to PNs began a few years ago owing to a lack of identity information of the PN holder on an upfront basis. Governor Y. V. Reddy’s objective now is two – fold – ease the central bank’s job on battling inflation by stemming availability of funds and safeguard against any sudden pull out of “hot money” (FII pullout could trigger a free fall for the rupee in the foreign exchange market). Will the Finance Minister blink?
The reason: swelling foreign inflows of Rs 2,20,523 crore of net investment in Indian equities at last count – with over 1,000 registered FIIs in India and 40 per cent of these funds relating to PNs began a few years ago owing to a lack of identity information of the PN holder on an upfront basis. Governor Y. V. Reddy’s objective now is two – fold – ease the central bank’s job on battling inflation by stemming availability of funds and safeguard against any sudden pull out of “hot money” (FII pullout could trigger a free fall for the rupee in the foreign exchange market). Will the Finance Minister blink?