Five FIIs issue 60% of all participatory notes
The S S Tarapore panel states that phaseout of PNs should be a precursor to the introduction of full capital account convertibility in the country.
By TNN |
NEW DELHI: Only five foreign institutional investors (FIIs) account for about 59.59% of the total participatory notes issued in India as of July-end. These FIIs include Morgan Stanley, Merrill Lynch Espana, Citigroup Global Markets, Goldman, Sachs & Co and CLSA Merchant Bankers.
The five top FIIs have issued participatory notes of the total notional value of over Rs 2 lakh crore, minister of state for finance PK Bansal told Lok Sabha in a written reply. There are 28 FIIs issuing PNs as of July-end, said Mr Bansal.
As per the regulatory structure, FIIs are required to submit a monthly report about PNs in a prescribed form to Sebi. This format does not facilitate tracking outstanding PNs on the basis of their sectors, he said. PNs are instruments through which unregistered entities invest in the Indian capital markets.
It is a derivative instrument issued in foreign jurisdictions by an FII or one of its associate entities. The investors in PNs merely derive the economic benefits of investing in the security, without actually owning the underlying Indian securities, which is held in the name of FII that issued the PN, Mr Bansal said.
While the value of PN is directly or indirectly related to the value of the Indian underlying security, there may not be one-to-one co-relation between the PN and the underlying security, he said.
Thus, it is not possible to co-relate investments in PNs with the shareholding pattern of companies, Mr Bansal said.
The five top FIIs have issued participatory notes of the total notional value of over Rs 2 lakh crore, minister of state for finance PK Bansal told Lok Sabha in a written reply. There are 28 FIIs issuing PNs as of July-end, said Mr Bansal.
As per the regulatory structure, FIIs are required to submit a monthly report about PNs in a prescribed form to Sebi. This format does not facilitate tracking outstanding PNs on the basis of their sectors, he said. PNs are instruments through which unregistered entities invest in the Indian capital markets.
It is a derivative instrument issued in foreign jurisdictions by an FII or one of its associate entities. The investors in PNs merely derive the economic benefits of investing in the security, without actually owning the underlying Indian securities, which is held in the name of FII that issued the PN, Mr Bansal said.
While the value of PN is directly or indirectly related to the value of the Indian underlying security, there may not be one-to-one co-relation between the PN and the underlying security, he said.
Thus, it is not possible to co-relate investments in PNs with the shareholding pattern of companies, Mr Bansal said.
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