No change in policy stance on P-Notes: Bhave

"No. Sebi has already notified the regulations which arose out of October decisions," Sebi Chairman C B Bhave told reporters when asked if there was any proposal to amend the regulations on PNs.     

In October 2007, Sebi had imposed restrictions on Foreign Institutional Investors (FIIs) to issue participatory notes.     

FIIs and their sub-accounts were asked not to issue fresh PNs against underlying derivatives and wind up their existing position in 18 months during which the market regulator will review the situation from time to time.     

Various curbs were also imposed on their exposure to these instruments in the cash segment.     

The decision was taken after a prolonged discussion among the Finance Ministry, banking regulator RBI and Sebi.     

As on August 2007, there were 34 FIIs/sub-accounts issuing offshore derivative instruments (ODIs) and the notional value of PNs outstanding stood at Rs 3,53,484 crore.     

However, business in participatory notes dropped significantly following the Sebi ban on issuance of PNs to unregulated foreign entities.     

Sebi has also asked FIIs to give an undertaking that these investment tools are not issued to non-resident (NRIs) and resident Indians, who otherwise do not need the FII route.