FM justifies Sebi move on PNs

Written by Economy Bureau | Mumbai, Oct 29 | Updated: Oct 30 2007, 05:19am hrs
Finance minister P Chidambaram on Monday strongly justified the market regulator Securities & Exchange Board of India's (Sebi) recent decisions allowing regulated entities (those subject to oversight in their home country by the concerned sectoral regulator) to invest through participatory notes (PNs). He asserted that Sebi's move aims at making the functioning of capital markets transparent. Sebi has made it clear that only regulated entities would be allowed to invest through PNs.

The finance minister said that the government was committed to liberalising the financial sector too. However, the government wants to be careful as it cannot afford to take any grievous and irreversable measures.

The minister, who was replying to a voley of questions at the US India CEO Forum Infrastructure Investment Conference, informed that various pensions and insurance funds have already made investments into India.

Chidambaram said that the government was aware that its corporate bonds market, which is less than 1% of the GDP, was largely due to cumbersome guidelines, lengthy procedures, lack of an efficient regulatory framework. We want to further deepen and liberalise that market and we will take a number of measures in this regard," he added.

On regulatory concerns expressed by US investors, Chidambaram said India has an independent judiciary and it has a well defined arbitration system. India has accepted UNCITRAL arbitration procedure and the arbitration is done in a place acceptable to both the parties in

Singapore, Hong Kong or the UK. There is no need to fear, he opined.

Dabhol is past: Chidambaram, Ahluwalia

Finance minister P Chidambaram and Planning Commission deputy chairman Montek Singh Ahluwalia made an obvious mention of the now revived Dabhol power project, rechristened as the Ratnagiri project in their respective presentations at the US India CEO Forum Infrastructure Investment Conference. The duo admitted that the project got embroiled in legal and regulatory issues. However, Chidambaram said all the issues were resolved faster than even the time taken in the US. Ahluwalia said that the project was awarded not through bidding route.The country has learnt from this experience, he added. The duo said that the Dabhol problem was past now.They were responding to queries by US investors on the uncertainty over implementation of agreements in India.