The government will constitute a panel comprising market regulators and government agencies to address the concerns of foreign institutional investors (FIIs) and suggest ways to simplify investment procedures.

"A group will be set up to address the issues," finance secretary Ashok Chawla told reporters after a meeting of representatives of FIIs and financial institutions with finance minister Pranab Mukherjee and other officials. The meeting was organised by the National Stock Exchange.

About 20-25 representatives from large size domestic institutions and FIIs were called for the meeting that lasted nearly two hours. Among the institutions represented were reportedly Barclays, Citigroup, DSP Merrill Lynch, Fidelity, ICICI Bank group, Kotak Mahindra Bank, Morgan Stanley, Reliance MF and UTIMF.

On FII concerns on taxation, especially the capital gains tax, he said, "They should send their comment (on the direct taxes code). That will be taken into consideration."

In their meeting with Mukherjee, FIIs and financial institutions also raised issues with regard to the Securities Transaction Tax (STT) and procedures, Chawla said, adding, "We also discussed ways to strengthen secondary and bond markets."

''They (FIIs) raised issues regarding securities transaction tax and capital gains in the tax regime under the proposed new direct tax code. We told them that the draft of the direct taxes code was in public domain and that they could respond with their views,'' Chawla told reporters after the meeting in New Delhi.