No proposal to ban P-Notes: SEBI chairman

17 October 2007

According to Damodaran, a large part of offshore derivative instruments, or ODIs, with underlying derivatives to be unwound. "Outstanding PNs with Indian derivatives can be renewed subject to 18-month close."

The draft is a part of inter-regulatory consultative process, he said. However, he clarified that they have not said that new PNs cannot be issued. The SEBI is not just addressing capital flows issue, he said.

Damodaran informed that the top PN issuers have been cooperative about providing details. SEBI did not have any meeting with FIIs before drafting P-Note letter. He added that they have received hedge fund applications to register with SEBI. The hedge funds can come via PNs, but subject to draft guidelines, he said.

They are revisiting FII registration procedure, he said. He pointed out that they are looking at some promoters who are routing their money out to re-invest in India.

CNBC-TV18 shares with domain-b its exclusive interview with M Damodaran:

You are saying that all underlying futures positions held by P-Notes have no problem of rolling over from month-to-month for the next 18 months, right?
Let me read to you what it is that it stated - it says that an outstanding PN with an Indian exchange traded derivative as underlying, can be renewed, subject to such reviewed PNs being wound up over a period of eighteen months.