CPI(M), BJP slam Sebi decision on Participatory Notes

The CPI(M) and BJP today slammed market regulator Sebi’s decision to relax restrictions on Participatory Notes (PNs).

The CPI(M) termed the move a “retrograde and illogical” step which should be put on hold. “Such an intervention by the Sebi”, the CPI(M) Politburo said in a statement, “in favour of a set of players, who are holding the market to ransom, is grossly violative of the role of a market regulator.”

Yesterday, Sebi lifted the 40 per cent cap on total assets held by the FIIs under PNs. The ceiling was imposed by the regulator in October last year to check flow of funds from anonymous sources.

The CPI(M) demanded that these steps be put on hold and immediate measures initiated to tighten regulation in the Indian financial markets.

Questioning the logic behind the move, former MP and member of the BJP’s national executive Kirit Somaya wondered whether bringing an artificial boom in the stock market was also a part of the mandate of the finance ministry and the Sebi.

Somaya said that in October 2007 the same finance minister who was now advocating lifting of curbs on investment through the PN route, strongly talked about putting restrictions on entry of hot money in the country by abusing the PN route.