Sebi also clarified the track record of foreign investors. “There have been issues faced regarding the provision of track record of the applicant, and we have been told that a new entity cannot have a one-year track record. We recognise that, and to facilitate that but without doing away with the track record provision, we now say that a fund manager of an entity would be required to have a... track record of one year and not the newly constituted entity with a track record of one year,” Damodaran said.

The Sebi chief also said there’s no evidence of terror money in the market. “Money that comes to our market comes through banking channels. Every intermediary is expected to follow the KYC (know your customer) norms, whether it is the depositary participant or whoever else, so there are several level of checks to see who is recipient, the broker or else,” he said.

As part of simplifying the registration process, Sebi also decided that FIIs can be registered on a permanent basis instead of the earlier practice of renewing registration every three years. Earlier this week, Sebi had asked sub-accounts of FIIs that issue P-Notes to register as FIIs for investing in the Indian capital market. This was to make sure that all foreign funds come to the country through the front door. Following SEBI’s directions, as many as 20 such investors had offered to register as FIIs.

Market experts welcomed the Sebi proposals. “The concerns of regulators regarding PNs have been known for a long time and I fully support a complete ban on P-Notes alongside more liberal FII registration norms. I disagree that this move will have a dampening effect on capital flows into the country . In fact this will only help in increasing capital flows due to better transparency and financial stability,” said Manoj Vaish, President & CEO-India, Dun & Bradstreet.

... contd.