New Delhi: Minutes after the carnage at the markets - Sensex crashed by 1,743 points within minutes of opening, prompting suspension of trade for an hour - Government said it is not in favour of banning Participatory Notes and hoped that the initial sense of alarm will quieten as the day progresses.
"We are not in favour of banning participatory notes. We have not banned PNs, we have simply placed a cap on the proportion of money coming through PNs vis-a-vis overall assets under management or overall derivative position," he said.
Finance Minister P Chidambaram soothed the markets and said it was a fallout of regulator Sebi's move to curb Foreign Institutional Investors. The 30-share index, Sensex, tumbled to 17,307.90, a fall never seen before.
Chidambaram said that there is no reason for panic or any sense of alarm.
“Steps have been taken to moderate capital flows to India. Sebi has proposed measures to moderate it. The system has a self-triggering mechanism. Sebi's measures will work. There is no need to get alarmed. I would urge everyone to go home and do their homework,” he said.
“I would like to assure investors that this proposal has come after talks among Sebi, RBI and the Government and it will work,” he added.
However, he also said that it is good for everyone to moderate capital inflows.
He also said that the inflows are very copious and it is in our benefit to moderate the inflows.
(With agency inputs)
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