Stricter KYC and Disclosure Norms Issues by SEBI for P-Notes [ Current Affairs ]
Securities and Exchange Board of India (SEBI) the markets regulator has relived the stricter KYC (Know Your Customer) norms and disclosure regime for Participatory Notes (P-Notes). Registered foreign institutional investors (FII) has released are offshore/overseas derivative instruments (ODIs) a P-Notes to overseas investors.
- With this implementation they made easier and cost-effective way for foreign investors to invest in Indian markets without directly registering as Foreign Portfolio Investors (FPIs).
- The main purpose of SEBI’s stricter KYC and disclosure norms is to mark it tougher to use these offshore instruments that do not reveal the money-trail and specifics of their users.
- All the users of P-Notes would have to survey Indian KYC and Anti Money Laundering (ALM) Regulations, nonetheless of their jurisdictions according to the new norms.
- P-Note users have to file suspicious transaction reports with the Indian Financial Intelligence Unit in this regard.
- ODI receptacles have to clatter monthly reports on ODIs all the midway transfers through the month.
- ODI issuers also have to carry reconfirmation of the ODI positions on a semi-annual basis.
- After taking into account suggestions the measure was issued from Special Investigation Team (SIT) on black money to confirm this route is not used for money filtering.
- ODIs have often been in controversy in India for alleged misuse for round-tripping of funds in the recent time.
- However since the SEBI made inflexible norms in the fresh years, they have also developed less attractive.
- Earlier in 2007, ODIs are used to account higher then 55 % of the total foreign fund currents in Indian capital markets, now their share has dropped to a record low level of 9.3%.
- Published on: June 14, 2016