Sebi removes curbs on P-notes

Sebi to review the entire framework of FII investment in India

The market regulator Securities & Exchange Board of India (Sebi) today, 6 October 2008, removed some restrictions on indirect investments in Indian shares by foreign portfolio investors. Sebi chairman C.B. Bhave said restrictions on issuing participatory notes (P-notes) where the underlying asset is a derivative, have been removed.

Sebi has also scrapped a rule which said P-notes could only account for up to 40% of the value of assets held by a foreign fund. Bhave also said the entire framework for FII participation needs to be reviewed and that the curbs were no longer considered necessary.

P-notes are issued by foreign funds registered in India to unregistered overseas investors.