No knee-jerk reaction on P-Notes curbs: Jaitley to investors

Seeking to soothe jittery investors, government today said it will not react in a "knee- jerk" manner to SIT recommendation on checking inflow of overseas investments via P-Notes, assuring that no action will be taken which adversely impacts the investment climate.
Finance Minister Arun Jaitley said a considered view will be taken on the Supreme-Court appointed Special Investigation Team (SIT) recommending stronger measures to identify owners of Participatory Notes (P-Notes) to check black money.
The comments came as stock markets slumped over 580 points and rupee slid to 64.15 to a dollar as investors saw any government action against P-notes as hurting genuine foreign investments.

"It is too early to say what view the government would take. But it will certainly not take any such action in a knee-jerk reaction, particularly one which has any adverse impact on investment environment," Jaitley told reporters in his Parliament House Office.
Separately, Revenue Secretary Shaktikanta Das said there is no need to "panic" and the Finance Ministry will take a view on the SIT suggestions only after consultations with Sebi, RBI and other institutions.
"At the moment there is no need to panic. We will take views after consultation with stakeholders including Sebi, RBI and related institution... There is no need for markets to react in any particular manner," he said.

The SIT had last week suggested to Sebi to put in place regulations that will help identify individuals holding P-Notes or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.

P-Notes are used by a large number of foreign investors to park funds in the equity market without disclosing their identity to the market regulator Sebi.
The BSE Sensex later closed down 551 points or 1.96 per cent at 27,561.38.
A similar recommendation in 2007 had triggered a major collapse in the stock market, prompting the then Finance Minister P Chidambaram to announce that no such measures would be taken by the government.