Market regulator Securities and Exchange Board of India will meet on Thursday to firm up proposals to check unregulated entities investing in Indian capital markets, even as 20 such agents offered to invest money through the front door.
"I cannot guess what will happen tomorrow. The board will meet and take a final decision," Sebi Chairman M Damodaran said in the national capital.
The regulator had in a discussion paper proposed curbing issuance of Participatory Notes -- a move which had sent the stock market into a tailspin last week.
However, Finance Minister P Chidambaram has already indicated that the Sebi proposals would become regulations "with or without modifications."
Damodaran too had hinted on Monday during an interaction with FIIs that the proposals would become regulations, saying: "We believe that responses we have on board at this point in time, are adequate for us to take the process forward, in terms of the inputs received and those that we might receive." Sebi, had on Monday, given sub-accounts issuing P-Notes 24 hours to convey their willingness to register as Foreign Institutional Investors.
The move to take them on board as FIIs is aimed at checking the flow of anonymous money into the equities market.
P-Notes are instruments like contract notes issued by FIIs to overseas investors who cannot directly invest in equity market as they are not registered. Out of over 1,100 FIIs registered with Sebi, only 34 have been issuing PNs.
"We have 34 P-Note issuing entities. Out of them, some are already FIIs. Those sub-accounts that were issuing P-Notes have all applied for conversion... Everyone who we expected to write to us, have all written," Damodaran said at a function in New Delhi on Wednesday.
Many investors are, however, peeved at not getting sufficient time to give their comments on Sebi's proposals.
Sebi had given just four days for comments on an issue as crucial as P-Notes, which continued to be in existence despite RBI repeatedly voicing concern against them.
In fact, a petition was filed on Tuesday in the Supreme Court to restrain the market regulator from implementing the proposals.
A retail investor from Karnataka, J R Narayana, said in his petition that a large number of investors, including himself, had been wrongfully prevented from making any comments in view of the short time span for receiving public comments.
