No proposal to ban PNs: Govt

The government said on Friday there is no proposal to ban participatory notes, which are instruments through which unregistered entities invest in the Indian securities markets.

"At present, there is no such proposal under consideration," Minister of State for Finance Pawan Kumar Bansal told Lok Sabha in a written reply.

He also informed that the expert committee headed by Ashok Lahiri after examining the issue recommended that the current dispensation of FIIs issuing PNs to entities overseas may continue.

The committee included representatives from the Reserve Bank and Securities and Exchange Board of India as members.

Currently, foreign institutonal investors can issue PNs only to regulated entities overseas and the FIIs are required to file a report at the end of each month with Securities and Exchange Board of India disclosing the names of the all
subscribers to the PNs.

Forex for infrastructure: The proposal to utilise foreign exchange reserve envisages that an SPV be established to receive forex funds from the RBI and lend to Indian companies implementing infrastructure projects in the country or to co-finance their ECBs for such projects solely for expenditure outside India, Finance Minister P Chidambaram said.

Though this proposal has built-in safeguard against monetary expansion, it is understood that the overall framework needs to be consistent with the legal requirement, must exhibit fiscal prudence, ensure integrity of RBI's balance sheet, and be consistent with global best practices, he said.

It would be ensured, in consultation with RBI, that necessary safeguards are fully incorporated in the modalities decided upon, the FM said.