The government, sources said, has been briefed of the misuse of the participatory notes by other regulatory authorities like the enforcement directorate and income tax.
The Reserve Bank of India had earlier expressed its reluctance over use of participatory notes as a derivative instrument used by the foreign institutional investors.
The banking regulator is of the view that monitoring the use of PNs for bringing in foreign exchange is a critical issue as there is no trail to the origin of the account holder or the final receiver of funds.
This poses problem in keeping a tab on the money laundering as well. Another controversial issue that might be taken up during the RBI's meeting with the ministry is the contentious issue on the use of foreign exchange reserves by the government for infrastructure development.
While it has been a long standing demand of the Planning Commission, the RBI had submitted that reserves could not be used for lending in the domestic market as the guidelines of the International Monetary Fund.
At the meeting, the focus also will be on the timing of the auction to raise around Rs 8000-9000 crore (Rs 80 to 90 billion) this month and draw up the final government borrowing calendar for the new financial year. Market sources said that there could be a twin auction to raise the money.
