Foreign hand pushes up PN value

NEW DELHI: The value of participatory notes (PNs), used mainly by faceless foreign entities to invest in Indian stock markets, have grown by over 70% to about Rs 2 lakh crore in January.

The notional value of PNs has risen from Rs 1,17,325 crore in January 2006 to Rs 2,02,487 crore in January 2007, minister of state for finance Pawan Kumar Bansal said in Lok Sabha in a written reply. The PNs, the minister said, were initially issued by large financial sector conglomerates like Merrill Lynch, Morgan Stanley, Goldman from where they reach the small-time entities before being invested in India.

The assets under management of foreign institutional investors increased from Rs 3,84,491 crore to Rs 5,81,087 crore between January 2006 and January 2007, the minister said adding the notional value of PNs as percentage of assets under FIIs rose to 34.8% during the same period. The minister said that RBI and Sebi have framed the policy for participation of FIIs with adequate safeguards in place to guard against any possible misuse of PNs.

The FIIs registered with Sebi that issue PNs are required to submit a monthly report to the market regulator in a prescribed format, he added.