By IANS
New Delhi : The recent move to curb participatory notes was taken to make processes in Indian stock markets more transparent, Securities and Exchange Board of India (SEBI) chairperson M. Damodaran said Wednesday.
“What we are attempting to do is to give India and the world something that people understand better, bring in more transparency and provide better products to people,” Damodaran said at the Fortune Global Forum here.
SEBI recently imposed limits on the issuance of participatory notes, an instrument used by unregistered foreigners to invest in the Indian stock markets, saying it wanted to make sure that foreign capital flows were more transparent.
The market regulator had directed foreign institutional investors (FIIs) that have issued participatory notes to overseas investors on underlying assets to unwind their positions within 18 months starting Oct 26.
“Things we are attempting and some of the steps we have taken might seem to be inconsistent with our long-term direction, but it’s not always that every short-term measure seems to be in the same direction as your long-term roadmap. On occasion you tend to move back a bit,” said Damodaran.
“It’s something like football – you see a lot of passing the ball back to the goalkeeper who is the last man in your team. In isolation that can be seen as a very negative move but you might be doing that in order to see that your journey forward becomes a little easier. That is exactly what we are trying to do,” the SEBI chief said.
Reserve Bank Governor Y. Venugopal Reddy, while presenting the mid-term review of India’s monetary policy for the current financial year Tuesday, had also said participatory notes were not desirable.